Income Shifting

Income shifting is a strategy where individuals or companies transfer income from one period or entity to another to reduce overall tax liability. This can involve moving income to a different jurisdiction, timing income recognition, or reallocating income between family members or business entities. The goal is to take advantage of lower tax rates or offsets available elsewhere, legally or sometimes illegally. It’s a common practice used to optimize tax outcomes but must comply with tax laws to avoid penalties. Essentially, it's about managing where and when income is reported to minimize the amount of taxes owed.