I am trying to reduce my tax burden this year by postponing al the income I can to next year. I use cash method of accounting in my S-Corp books.Would it be legal to hold on to (not deposit) payments I receive in the next couple of months until January, so as to have that income show up in my accounts next year?If you have received the payments it doesn't matter if you deposit them or not; they are supposed to be counted for this year. If you're audited and the agent sees evidence that the checks were held instead of being deposited, you'll likely see an adjustment.Now, if the people that owed you the payments don't send the checks until after the first of the year you will count them as revenue next year.Sometimes business owners will find that with all of the other activities occurring near the end of the year, they sometimes get behind on sending out invoices and making collection calls. When this happens, it has the effect of deferring revenue until later.If you want to reduce your taxable income you might consider paying your bills sooner than you might otherwise (but not before they're actually owed). Also, you might consider purchasing equipment (to get the Sec. 179 depreciation) that you'd otherwise purchase early next year. Likewise, you can accelerate other expenditures that were planned for next year. Don't forget that if you charge a purchase on your bank credit card you can treat that as having been paid (for tax purposes) as of the date charged.Lastly, you should consider making pre-tax contributions to retirement plans to reduce your taxable income.
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