What would be the effect of this income shift on federal tax

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Question - An individual has a consulting business as a sole proprietor. It is December 2021. For the year to date, the individual has received $145,000 in net income from consulting, their only source of income. They anticipate the same level of income in 2022. The individual is currently working on a consulting project for which the client fees will be $20,000. For 2021 the individual is in a 29% federal tax bracket. The individual anticipates that for 2022 they will be in the 26% federal tax bracket. The individual is considering the possibility of shifting the consulting income from 2021 to 2022 by completing the project and getting paid for it in January 2022 rather than in December 2021. What would be the effect of this income shift on federal tax?

A. Total federal tax for both years combined $20,000 lower

B. Total federal tax for both years combined $600 lower

C. Total federal tax for both years combined $20,000 higher

D. Total federal tax for both years combined $600 higher

E. none of the above

Reference no: EM133110312

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