Business tax planning – Can you deduct 2020 bonuses this year?

Description

Abstract: Businesses may be familiar with the rule that permits them to deduct employee bonuses this year if they pay employees within 2½ months after the end of the tax year. It’s an attractive year-end planning technique that lets a business enjoy a tax deduction this year, while its employees needn’t report the income until next year. It’s important to understand the requirements, however, because these tax benefits aren’t always available. This article provides a quick review.