Make use of the tax laws that are in place now and be cautious when deferring income into the future.

The tax laws in place right now are more advantageous than they might be in the future. So, my advice is to make use of the tax laws that are in place now and be cautious when deferring income into the future.

A capital gain occurs when the taxpayer buys an asset and the value appreciates. When the taxpayer later sells it, he/she pays the capital gains tax when taxes are due for the year in which the asset was sold. Capital gains are generally taxed at a lower rate than ordinary income—always have been, and probably always will be.

If an investor has had bad luck in the stock market, then that can sometimes mean good luck with respect to taxes, because capital losses may be offset by capital gains. In the event that an investor realizes capital gains, there may be no tax liability on the gains if he/she has losses to offset them.

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	Income Deferral The Finance Guy shares advice for taking advantage of tax laws currently in place.

A 401(k) retirement savings plan is another classic way to defer income. An individual can defer income that would normally be taxed at a higher tax rate for future income that may be taxed at a lower rate. If an individual works for a company that matches a portion or all of the individual's 401(k) contributions, then he/she should take advantage of the free matched money.

In addition, if an individual has an opportunity to acquire after-tax assets, especially capital gains property, he/she should take advantage of such an opportunity.

Finally, individuals may wish to consider annuities. Ordinary annuities are instruments into which an individual contributes money, and while he/she doesn't receive a tax break immediately, he/she may be able to defer the growth into the future. When an individual withdraws money from an annuity, it is taxed like ordinary income. Assuming that taxes are lower when the individual withdraws the money, this could be positive; however, it could impact the individual negatively if tax rates are higher when he/she withdraws the money.

	Advice from John Henry McDonald.

If an individual is considering deferring income, he/she may wish to consider using capital gains tax laws to boost his/her after-tax savings, as this strategy may be more beneficial than deferring income through the purchase of an annuity.

For more information, read: "Higher Taxes Are Coming: Are you Prepared?" by Laura Sonders with the Wall Street Journal.