Does the thought of April 15 strike dread in your heart? Even if you are scrupulous about keeping track of receipts and business expenses and truthful and transparent on your tax return, you could be in for a cruel surprise come tax time. That’s why it’s so important to develop a personal or business tax plan with trusted professionals well in advance. In addition to consulting an expert, keep in mind this timeless tax planning advice that you can implement immediately.
Report all Income and Accounts
Keep track of all income and accounts and never try to hide anything, especially offshore accounts, from the IRS. They will find out and when they do the penalties can be severe. When you sign your taxes, you’re certifying that the information you’ve provided is the truth. If you lie, even with a careless mistake, you’re committing perjury and can be subject to a whole host of huge fines. In severe cases, you could even face a jail sentence. Err on the side of transparency and document, track and report all income. This is the most important tax planning advice you can follow.
Push income, Pull Expenses
Taxes are a numbers game. You want your taxable income column as low as possible to minimize your tax burden. If possible, push income into next year while increasing your expenses. With a little preparation and clever accounting, you can easily ramp up your expenses. Talk to you tax advisor about the best way to implement this plan.
Keep Track of Itemized Deductions
Most tax planning advice addresses the need to make the most of your deductions. You can claim tons of deductions on your taxes as long as you have a paper trail to justify them. Keep close track of any business expenses, charity donations or costs related to volunteering. For large charitable donations, you might need to fill out form 8283. Set aside a designated area for all of your receipts. Don’t toss the paperwork after your taxes are filed. Keep them for at least six years so if you get audited you can show the IRS.
Utilize All Tax Credits
Ask your tax advisor for tax planning advice on what credits could apply to your particular situation and make the most of them. If you’re attending college, having children, selling your house or any other number of big life events, you might qualify for a money-saving credit.
Watch the News
A strange but useful bit of tax planning advice, keeping an eye on what happens in the halls of Congress or the Senate will equip you with valuable information on new tax laws, credits or deductions. Tax laws change constantly. Your tax advisor will be aware of the fluctuations in policy, but there’s no harm in keeping yourself equally informed. What happens in the House of Representatives can positively or negatively impact your finances.
Swap Your IRA for a ROTH IRA
Why do you still have a traditional IRA? Switch it for a ROTH IRA and reap giant benefits with your taxes. If you follow only one piece of tax planning advice, make this it. You’re leaving a lot of money on the table if you’re not investing in a ROTH. The new year is a great time to financially clean house, including your portfolio and investments. Make the switch to a ROTH and review your investments with your accountant or tax advisor to determine where the dead weight is and cut it appropriately.
Max out Your Retirement Contribution
Contribute as much as possible to your retirement before the end of the year and write it off your taxes. You’ll be doing yourself the big favor of kicking in more to your retirement fund and keeping Uncle Sam away from your money. A well thought out tax plan helps here. Set aside the amount you want to save beforehand so you’re not struggling at the end of the year.
All of the tax planning advice in the world is useless if you don’t have an accredited tax advisor to help you create a tax plan that is useful and unique to you. Advanced Accounting’s staff has several years of experience helping individuals, small businesses and corporations craft tax plans and lessen their tax burdens through smart strategies. Let their years of experience work for you. Contact us today and take advantages of all of the tax planning strategies we can employ for you and your business.