by Barry Steiner, CPA (Former IRS agent)
Managing a tax burden has never been more difficult — whether you’re managing your individual tax rates, the rates on your investments, the taxes on your privately held or pass-through business, or the income of executives and shareholders at your company. Lawmakers have been aggressively using the tax code to try to get the economy back on track, and there are now more ways than ever to reduce your tax liability. However, all of them take planning.
Free Tax Tip #1: Defer income and accelerate deductions
Deferring income tax is a basic item of tax planning. As a general rule, you want to accelerate deductions into the current year and defer income into next year. There are many income items and expenses you can control, and self-employed taxpayers often have the best opportunities to legally shift income and expenses. Think about deferring bonuses, consulting income or self-employment income. Speaking of deductions — you can accelerate state/local income taxes, real estate taxes, and interest expenses.
“Two things you need to know about taxes. They’ve extended the deadline to April 18, and when you write your check, just make it out to China.” – David Letterman
“Tax day is the day that ordinary Americans send their money to Washington, D.C., and wealthy Americans send their money to the Cayman Islands.” – Jimmy Kimmel
“Every year, I include a piece of chicken in the envelope with my taxes. Not as a bribe, just a little treat for the guy at the IRS who opens it.” – Jimmy Kimmel
“It’s fitting that April 14 is National Pecan Day because today, we recognize nuts. And tomorrow, on April 15, we pay our taxes to support them.” – Craig Ferguson
“I’m not going to pay taxes. When they say I’m going to prison, I’II say no, prisons cost taxpayers a lot of money. You keep what it would have cost to incarcerate me, and we’ll call it even.” -Jimmy Kimmel
Check back next week for another free tax tip – one tip for each week of the tax season until April 17th.
Barry R. Steiner is a Chicago-based CPA and former IRS Agent. He’s the author of the best-selling income tax guide “Pay Less Tax Legally” and was a regularly featured guest on ABC-TV’s “Good Morning America”. Barry has maintained his own tax practice for the past 40 years, and most recently has authored two e-books: “Infernal Residue” and “Kiss My IRS”. More info at KissMyIRS.com »