Social Security tax update: How high can it go?
Employees, self-employed individuals, and employers all pay Social Security tax, and the amounts can get bigger every year. And yet, many people...
2 min read
Scott Henvey
:
May 10, 2024 9:33:35 AM
Businesses usually want to delay recognition of taxable income into future years and accelerate deductions into the current year. But when is it wise to do the opposite? And why would you want to?
One reason might be tax law changes that raise tax rates. The Biden administration has proposed raising the corporate federal income tax rate from its current flat 21% to 28%. Another reason may be because you expect your noncorporate pass-through entity business to pay taxes at higher rates in the future and the pass-through income will be taxed on your personal return. There have also been discussions in Washington about raising individual federal income tax rates.
If you believe your business income could be subject to tax rate increases, you might want to accelerate income recognition into the current tax year to benefit from the current lower tax rates. At the same time, you may want to postpone deductions into a later tax year, when rates are higher and the deductions will be more beneficial.
To fast-track income
Consider these options if you want to accelerate revenue recognition into the current tax year:
To postpone deductions
Consider the following actions to postpone deductions into a higher-rate tax year, which will maximize their value:
Contact us to discuss the best tax planning actions in the light of your business’s unique tax situation.
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