November 26, 2013
By projecting your business’s income and expenses for 2013 and 2014, you can determine how to time them to save — or at least defer — tax. If you will be in the same or lower tax bracket in 2014, consider:
- Deferring income to 2014. If your business uses the cash method of accounting, you can defer billing for your products or services. Or, if you use the accrual method, you can delay shipping products or delivering services.
- Accelerating deductible expenses into 2013. If you are a cash-basis taxpayer, you may make a state estimated tax payment before December 31 so you can deduct it this year rather than next. Both cash-and accrual-basis taxpayers can charge expenses on a credit card and deduct them in the year charged, regardless of when the credit card bill is paid.
If it looks like you will be in a higher tax bracket in 2014, accelerating income and deferring deductible expenses may save you more tax.
Accurately projecting income and expenses can be challenging. For help, please contact JPS today. We can also provide additional ideas for timing business income and expenses to your tax advantage.