Getting paid next year for this year’s could be a great benefit to you!
If you’re self-employed and pay your taxes in full up front, consider holding off on sending out invoices until close to the year’s end. And if your clients pay your invoice thirty to sixty days out, there’s a good chance you won’t receive payment until 2015. If that’s true, you can lower taxes by lowering your tax bracket.
You can also postpone income by making purchases that you can deduct in 2014 that you have been planning on making in 2015. This will lower your taxable income and save you money on taxes you could owe.
Other than just saving money on taxes, additional good reasons you’d want to defer income may be things like making sure you hit certain thresholds for credits like child tax credits, education tax credits, and so on.
Of course you can’t do this every year because it will catch up with you as you would be just postponing paying but it can be a great strategy situationally when you’re transitioning between tax brackets.
We’re always here to offer advice on when it is right for you to defer income. Everyone has a unique situation and it’s always best to get advice from a professional that understands where you are financially.
Do you have the support you need to manage your small business bookkeeping?
Schedule a 30-minute appointment to speak with a local small business adviser.