In our Tax Strategies for the Self-Employed On-the-Go course, we have a year-end prepaid expense strategy.

As a year-end tax-deduction strategy, prepaid expenses do create tax benefits.

But tax benefits depend on tax brackets. In the 40 percent tax bracket, paying $10,000 in prepaid tax deductions generates $4,000 in tax benefits, but that still leaves you out of pocket $6,000.

The out-of-pocket cash is the fly in the ointment that our consultant customer from Newark, Delaware, pointed out.

Tax Strategy

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