Proactive Tax Planning Can Help Save You Money
All planning involves looking ahead to reach a specific goal. People are inclined to make careful plans when they consider making a home purchase, accepting a new job, taking a dream vacation, or investing for retirement. But when it comes to taxes, they often leave matters to chance, perhaps not realizing the tax savings that can result.
THE GOAL OF TAX PLANNING IS TO SAVE YOU MONEY!
Every taxpayer has the right AND the responsibility to lower his/her tax bill using a number of different legal methods. Tax planning is the tool that helps you evaluate your financial situation in light of current laws to make sure that you get the benefit of all deductions you’re entitled to.
Your Tax Planning Barometer
Consider tax planning BEFORE making a decision about any of the following:
- Borrowing money for any purpose
- Paying off a loan
- Contributing to or taking funds from any type of retirement plan
- Buying or selling any kind of property (vacation home, rental property, other real estate, stocks and bonds, partnership interest, vehicles, personal residence, a business or business assets, tax shelter, etc.)
- Retiring
- Getting married
- Negotiating a divorce agreement
- Making investments where your participation will be minimal
- Making a large gift to your child or other relative
- Changing the form of your business to a partnership or corporation
- Incurring business expenses as an employee
- Holding an uncollectible note
- Moving
When is the Best Time to Start?
To gain the most benefit from your tax planning, you need to make it a consideration all year long. However, many taxpayers find that fall is the best planning season. By then, law changes and new tax rates are usually known, and there’s still enough time to make adjustments before year’s end. You should strongly consider tax planning if your income, deductions, income tax withholding, or estimated tax payments are significantly more or less than last year.
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