Many tax breaks are only available to people with an adjusted gross income under a certain amount. Let’s say you could qualify for some of these valuable tax deductions and credits — but your income is a little too high.
The first step in this process is to make a projection of your income for next year, as well as your expected deductions and tax credits. With the projection in hand, we can see how close you are to claiming various tax breaks — and whether or not you should take some aggressive steps to lower your adjusted gross income for the year.It may make sense to lower it before the end of the year.
Here’s some examples of income-sensitive tax breaks:
- Higher education tax breaks
- Child tax credit
- Adoption credit
- Traditional and Roth IRA contributions
This is a smart move for small business owners who have some control over when they receive income.