Shifting Income

Under selected situations, some of us have the ability to accelerate or defer some of our income. In concept, the easiest way to accelerate income is to (for instance) get a January paycheck in December; or take a bonus in December that might otherwise be paid in January. Conversely, the simplest way of deferring income is pretty much the opposite – have your December paycheck paid to you in January; or a bonus that might get paid to you for the holidays in December, gets pushed off to January. Obviously, what benefits one year tends to negatively impact the other year. What makes sense is a very personal situation.

For those of us in businesses that report on a cash basis (that is, when the deposits are made), a long established, tried and true method is simply holding back deposits received in late December and not depositing them until January. Need I tell you that technically of course that is not allowed – once you have the checks you’re considered in receipt of same, even if you take advantage of holding back deposits several days. Understand that the concept of constructive receipt is a very important one, and the lack of deposits for the last couple weeks in December, with a huge deposit January 2^nd, can raise red flags.