Deferring Income - Tax Implications

[kaput]

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[bart]

well tax evasion is after the fact, tax avoidance is what you want to do which is legal

[DJ_NAV]

Income is recognized basically on the year it is paid. Only amounts paid in the year are reported on the T slip. However, bonuses declared in a fiscal year must be paid within 180 days IIRC(this is corporate's responsibility, not yours).

[Euro838]

Depends how you are getting paid now, I am assuming you have a normal income/salary employee type scenario. So what are you going to do next year? No point in deferring this year's income if you are going to be working say come January.

For example,

if you make say $50K from Jan-Oct 2011, and you defer some of it say $10K for January 2012 giving you a 2011 income of $40K. You will pay less taxes for the 2011 tax year.

But if you are going to work full time in 2012 starting in January and say make $75K then the $10K that you deferred will bring your 2012 income up to $85K pushing you into a higher tax bracket and cause you to pay more taxes on the $10K you deferred.

I would not deferr employment income unless you do not think you will make as much the following year. Eventually you'll have to pay the taxes on it, just make sure you plan it right or you'll pay more than you need to.

[tenth]

Originally posted by DJ_NAV
Income is recognized basically on the year it is paid. Only amounts paid in the year are reported on the T slip. However, bonuses declared in a fiscal year must be paid within 180 days IIRC(this is corporate's responsibility, not yours).
180 days is for the corporate tax deduction to deduct in the year the bonus relates to. Not applicable to the employee.

The bonus receipt for individuals is recognized in the year paid. Will you still be an employee in 2012?

[kaput]

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[bitteeinbit]

Has anyone actually done this before? If it's possible, I could have done this many times as I've had varying incomes. It would be amazing to switch over part of one year's income to the next year if you know you'll be travelling or not earning quite as much. I'd be interested in first-hand accounts of how it works.