That's because an employee must elect in advance how much to set aside in the plan. Similar rules apply to nonqualified deferred compensation plans. Defer equipment purchases to salvage expensing deduction. Waiting until your tax return is due to determine your deductions and possible credits is too late. Planning, even for low and middle income individuals, can result in concrete tax savings.
Some planning simply requires common sense.
Other planning requires a thorough understanding of our tax laws. It is here that a tax advisor can help.