Did you know it’s sometimes not the best tax planning strategy to take as many deductions as possible?
That may sound like blasphemy, but hear me out as we wrap up the year and finish up Tax Planning Season!
So why would you ever want to delay taking a deduction?
The answer is this: You are going to crush your income next year compared to this year.
If you are in the early stages of your business, or just hitting that hockey stick growth curve and your income will be significantly higher next year, it is probably a good idea to hold off on taking any additional deductions.
You want to do this because next year if your income is significantly higher, you will be in a much higher tax bracket than the current year, so the deduction will be that much more valuable when taken next year.
Of course, having the cash on the deduction now is always valuable so you must weigh the cost of the tax savings in the higher bracket compared to the cost of other capital you might use to grow your business over the year.