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Lane
Lane, JD, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 11187
Experience:  Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986
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I am getting a severance package at the end of the tax year.

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I am getting a severance package at the end of the tax year. Can I defer this as income into the next tax year to reduce my current year tax liability?

Lane :

Hi,

Lane :

Please don

Lane :

't shoot the messenger here, but you'll have to ask them if they can give you a check with a 2014 date

Customer:

Hmmm...I've asked that but the policy is to date it for when the check is written. Do I have any other alternatives to reduce my liability?

Lane :

IRS applies somthing call the "Doctrine of Constructive Receipt," which is used to keep people from doing exactly that (deferring a year-end check into the next year)

Lane :

Here's a good article on that piece: http://biztaxlaw.about.com/od/glossaryc/g/constructivercv.htm NOw, other options? ...

Customer:

Is the article about individual income tax or business?

Lane :

If your 401K plan allows it MOST DO, you can ask that a large portion of the money go into your 401(k) plan (or at least be certain to credit as much as a percentage as you usually do)... this is money that will come right off the top for tax purposes, BU IT'S STILL YOURS!at least be certain

Lane :

On your previous questions, both really, but she explains the concept well...you can even be considered to have the money if it doen't actually arrive before the end of the year

Customer:

OK. I think that makes it pretty clear. Thank you! I won't shoot the messenger!

Lane :

There is NO special technique regarding severance pay or A big year end bonus OTHER THAN doing all the things you possibly can on your tax for that years to take every deduction possible

Lane :

FIle jointly, get all of your exemptions, if you itemize don't forget anything .. her e's a pretty exaustive list

Customer:

That's excellent. Thank you!

Lane and 3 other Tax Specialists are ready to help you