- Charitable donations. Donations to churches, universities or charities (e.g. Salvation Army or Goodwill) can easily be accelerated into the current tax year. In some cases, the organization can give one credit against a future pledge.
- Property taxes. In my county, one can choose to pay next year's property tax in the current tax year. When one does this, two times the property tax can be used for itemized deductions. However, if one has triggered the AMT tax, additional property tax deductions will reduce one's tax liability.
- Supplies. For the self-employed, one can purchase additional supplies or pay other legitimate expenses. Purchases should be done within reason. Three extra months of stationery supplies may be reasonable. 10 years of supplies would not.
- Retirement account. Contributing to a tax exempt retirement account is the easiest way for a wage earner or a self-employed person to defer income. If one is not already maxed out, increase 401K or deductible IRA contributions.
- Bonuses. While one cannot delay taking wage income, sometimes a bonus can be taken in the following tax year. Check with your employer.
- Billing. If one operates on a cash basis, one can sometimes delay billing to the following tax year for services provided this year. This makes sense to do if the following year is not expected to generate as much business as this year.
Since I have been employed by a company for all of my working career, I have only used #1 and #2 for accelerating deductions and #1 and #2 for delaying income. If I should create self-employment income in the future, I will consider using #3 for each approach.
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This is not financial or tax advice. Please consult a professional advisor.
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