Tax planning has all of the elements needed to keep you on track with your taxes throughout the year. Failure to plan is a plan to fail.
I don’t know who said it first, but I think I say this most frequently.
‘Tax planning’ is not only about planning to keep receipts in a shoebox. While that may be a cliché, I don’t care where you keep your receipts; just be sure to keep them.
‘Tax planning’ is a fairly easy to maintain plan that will ensure you are strategically managing income and expenses to ensure you pay as little in taxes as legally necessary. Here is a tax planning primer, a simplified overview, so to speak, to help you understand what is needed to say on track with your taxes.
1. Tax Bracket
The whole conversation starts with understanding into which tax bracket your income places you. Currently, tax brackets range from 10% to 37%. But your entire income is not taxed at that rate.
2. Deduction vs. Credit
This is at the heart of tax planning. A deduction reduces the amount you are taxed, while a credit is a dollar-for-dollar credit for money you’ve already paid. I help my clients find or plan for expenses that can be used as credits to lower their tax bill.
3. Standard vs. Itemized Deduction
Most Americans take the standard deduction because it makes your tax prep easy and quick. Each year, the standard deduction is modified based on inflation. But, taking the time and getting help with your tax planning can help you dramatically lower your tax bill by using the itemized deduction.
I help my clients find and plan for deductions that will lower their tax bill and, as planning becomes part of their life, lower their tax stress.
4. New Deductions and Credits
This is the subject that I love to talk about! While you are busy living, raising kids, and pursuing your best life, I read and study new tax deductions and credits. Who said Accountancy can’t be fun??
Seriously though, my time spent in the minutia of tax law means I am up to date on any new tax breaks. I also know which tax breaks have expired or are no longer accepted. So, either way, I am on your side to make tax time as stress-free as possible.
5. Future Planning
If you come to me tomorrow, I can help you with the first four issues and hopefully save you money. The real benefit to working with me or one of my colleagues is in future planning. A good tax professional will help you plan ahead, manage your W-4, make 401k contributions, or fund a 529 plan. These changes will literally pay off each tax year.
Like I alluded to earlier, I spend 40+ hours a week immersed in the tax world. I have decades of experience helping families and business like yours lower your tax bill and tax stress. Reach out and ask any questions, or better yet, let’s set up an appointment to sit down and look at your situation.