Did you know that you could save thousands of dollars with tax planning?
Talk about a stack of cash!
Even better, the process is completely legal. And, anyone can do it.
To learn how you can take advantage of tax planning and save your money, keep reading.
What Is Tax Planning?
Tax planning involves analyzing your finances in order to minimize your tax burden. In other words, it’s a financial strategy that people use to decrease the amount that they have to pay in taxes.
Over time, this could lead to a savings of hundreds to thousands of dollars, depending on your situation.
Our planning strategies are essential for individuals, families, businesses, and other entities. And, everyone can benefit from tax services.
The key to tax resolution is finding tax benefits that you qualify for, such as the following:
- Deductions, which reduce taxable income
- Rebates, which act as refunds after a retroactive tax decrease
- Credits, which allow you to take away from the amount of taxes you owe
- Concessions, which are government reductions in the amount that particular groups of people owe in taxes
- Exemptions, which reduce your tax responsibility
Anyone who has to pay taxes should consider accounting services, such as retirement tax planning and small business tax planning.
Whether you have a low or high income, tax planning services can help you lower your tax burden.
What Are the Types of Tax Planning?
Depending on your needs, you may want to invest in different tax solutions. There are four different types of tax planning that you can take advantage of:
- Federal income tax planning
- Retirement tax planning
- Estate tax planning
- Small business tax planning
Each one of these planning strategies can help you protect your money from taxation. With the right mix of financial planning services, you can make the most of your money from different accounts.
What Are the Benefits of Tax Planning?
We’ve defined tax planning as a way to shield your income (and other money you have) from taxation. However, there are plenty of other ways that tax planning can help you now and in the future.
Solves Tax Issues
A professional tax accountant can help you identify any problems that you may have with your tax documents. Whether you owe money or have inconsistencies, your accountant can help.
By addressing these problems, you may be able to find ways that you could gain more funds.
Tax Planning Builds Future Funds
Whether you’re saving for retirement, college, or something else, tax planning services can help. There are multiple tax benefits for people who are saving for life events like these.
From business tax to personal tax, your accountant should be able to identify credits and breaks that you can take advantage of. And, they can help you set up the right accounts to save for these occasions.
Tax Planning Supports Small Businesses
Business tax can get complicated. For small businesses, navigating these tax codes can be even more stressful.
Without business tax services, you’re likely going to waste money on a variety of costs that you don’t need to worry about. Many business owners end up overpaying their taxes because they don’t understand their liabilities and breaks.
With tax services, any business owner can save more money and grow their business using those resources.
Planning Maximizes Estates
If your estate is large enough to incur federal estate taxes, you should invest in financial planning services for your estate. With the proper tax services, you can make a notable difference in your family’s finances.
And, over time, you can reduce your tax liability and save more money for your heirs.
How Can I Plan for Tax Day?
Everyone gets a little nervous when tax day rolls around. Unless you’re a certified accountant, you’re likely not looking forward to the next tax day.
Your goal on tax day is to solve tax-related issues while minimizing your tax liability.
But, if you’re new to financial planning, you’ll need to draw up a plan before diving into all of the fun.
1. Look Through Last Year’s Tax Return
If you’ve ever worked with an accountant or other tax professional, they’ve likely asked you for last year’s tax return. This is because your last tax return can tell you a lot about your financial health.
While you’re preparing this year’s taxes, that document is indispensable.
To prepare yourself for this tax season, you should dig up your report from last year and take a look at all of the information it offers you.
First, you should ensure that all of the information is correct.
Second, you should look at the exemptions and breaks that you took last year 9if any). Make a note of these so that you can consider taking these same breaks again this year.
Third and last, you should keep this copy of your tax return. You’re going to need it for the next few steps.
2. Gather the Necessary Documents
Tax season requires a lot of documents. Your tax accountant is going to ask for any and every piece of paper that can tell them information about your financial situation.
In addition to last year’s tax return, here are the forms you’ll need:
- W-2 tax form
- 1040 tax form
- 1099 tax form
- K-1 tax form
- W-4 tax form
- Tax extension form
- I-9 tax form
- W-9 tax form
- 1040-ES tax form
You may or may not need all of these forms. But, these are the general considerations. Ask your tax accountant for the exact forms that you’ll need based on your financial situation.
Consult Tax Planning Experts
No matter who you are and what your financial goals are, planning is necessary. The amount of money that you could save from hiring accounting services will be well worth the amount that you pay.
If you’re ready to build a tax planning strategy for yourself, contact our group of financial professionals at Basta + Croop. Check out the tax and accounting services we offer.
We can’t wait to get started.