Two new tax laws passed this year—the Tax Increase Prevention and Reconciliation Act (TIPRA) and the Pension Protection Act (PPA) — have added a few new wrinkles to the mix.
Of course, in most years, your rule of thumb should be to push discretionary income into the next year, when practical. On the flip side, try to pull deductions into 2006.
Here’s why: Any income you defer until next year won’t incur taxes until then. At the very least, that buys you some tax deferral for one year. And, depending on what happens over the next 12 months, you might be able to defer the tax further or even wipe it out completely.
On the other hand, deductions accelerated into this year can offset your 2006 tax liability. So, you reap an immediate tax benefit instead of having to wait another year. With all that in mind, we offer you the 27 best tax-saving strategies for the end of the year: nine each for personal taxes, business taxes and taxes on retirement plans and investments.
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