Although Silkin Management Group is not an accounting firm, we still attempt to stay on top of anything that will affect our clients’ financial situation. Taxes certainly fall into that category. With the majority of Silkin’s clients being private practice owners in various health care fields, it behooves us to pass along what we find out regarding financial and tax matters.
Thanks to the extension of the “Bush tax cuts” through 2012, the current federal income tax environment remains favorable through year-end. Therefore now is the time to take advantage of this favorable climate because we don’t know what will change in 2013. Taxes could easily go up if there is a significant victory by the Democrats. We will present over the next week or so, on our various Silkin Management Group blog sites, some ideas that any of our readers might find useful in this area.
The traditional approach many people take is to defer income into the next year if they expect to be in a lower tax bracket at that time. This can be done by waiting until near the end of the year to send out billings and/or slowing down insurance submissions, etc. You can also postpone taxable income by accelerating some deductible business expenditures into this year. Deferring income may also be helpful if you are affected by unfavorable phase-out rules that reduce or eliminate various tax breaks such as child tax credits, education credits, etc.
But there is the other side of the coin to also consider, especially with a very contentious election season ahead of us. If the Bush tax cuts are allowed to expire at the end of the year (which is likely if you are earning over $250,000 a year), deferring income may not be the best way to go as you could be exposed to higher rates next year. In that case, you would want to look at ways to accelerate income into this year and deferring deductions until next year.
Again, we’ll present more ideas on this subject in upcoming Silkin Management Group blogs.