Taking steps to defer your current individual federal income-tax bill is often a good idea, especially if you expect to be in the same or lower tax bracket in future years.
In that situation, making moves to lower this year’s taxable income will at least put off the tax day of reckoning and give you more cash to work with until the bill comes due. If your tax rates turn out to be lower in future years, deferring taxable income into those coming years will cause the deferred amounts to be taxed lower rates.
However, as MarketWatch reports, in today’s federal income tax environment, you could potentially have “too much” deferral.
Two big reasons why: 1) future tax rates could go up and 2) the potential negative impact of tax deferral on the pass-through business income deduction if you are a small business owner.
Thanks to the 2017 tax changes we know what the individual federal income tax rates and brackets are for this year and next year. But after 2020, it’s unknown if the current rate cuts will be allowed to survive through 2025, as scheduled, or if the government will scrap them. Read the full story.
