Blog Archive
November 2014

Income Deferral is Back

Deferring tax by deferring income or accelerating expenses is generally a cornerstone of good tax planning. However, in recent years there have been tax rate increases which made this a bad idea since it would push income from a lower tax bracket year into a higher bracket as the rates went up the next year, negating the benefit of paying tax later. The rate increases of recent years appear to be over for now, so you should once again be looking to defer tax. This means you should look to accelerate deductions into the current year and defer income into the next year. There are many items for which you may be able to control timing:

Income:

  • Consulting income
  • Other self-employment income
  • Real estate sales
  • Gain on stock sales
  • Other property sales
  • Retirement plan distributions

Expenses:

  • State and local income taxes
  • Losses on stock sales
  • Real estate taxes
  • Mortgage interest
  • Margin interest
  • Charitable contributions

As with all tax planning, the general rule does not always work...


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