Midyear Tax Planning: Top 10 Tips in a Time of Uncertainty
With the Bush tax cuts set to expire at the end of the year, we are in a time of uncertainty over future tax rates for businesses and individualsbut there are steps that accountants can take now in light of this uncertainty to save their clients money. BlumShapiro, a regional accounting, tax and business consulting firm based in New England, offers the following tax-saving tips that individuals and businesses, and their tax practitioners, should consider this summer.
1. Consider Accelerating Income to 2012
It is often recommended that businesses defer taxable income to the following year, which can be done by sending out invoices later in the year or postponing some deductible expenses. But this approach is only useful if you expect to pay a lower tax rate next year, and with the Bush tax cuts scheduled to expire at year end, many businesses and individuals may find themselves paying higher rates in 2013. If this is the case, then it may be more beneficial to accelerate some taxable income into this year so that it can be taxed at the lower rate.