Tax planning and tax strategies aren’t just for big businesses. Don’t make the mistake of not planning ahead, or worse, preparing your taxes on your own. You’ll almost certainly wind up overpaying. To add insult to injury, inexpertly prepared taxes are red flags for the IRS, putting you in danger of getting audited. Take the headache out of preparing your taxes! Turn to a professional for your personal tax planning.
The tax code is extremely confusing so it’s no wonder that so many people miss out on deductions that could substantially lower their tax burden. Some of the most commonly neglected deductions are:
– Small donations like pantry items for a food bank, or coffee for your volunteers
– Education expenses
– Job hunting costs
– Points for refinancing your mortgage
– Travel expenses for military personnel
– Modifications to your home to make it more energy efficient
These are only a few of the deductions that you are probably missing. There are plenty more depending on your personal situation and finances. You’ll never know until you sit down with a tax advisor to begin your own personal tax planning strategy.
When you put together a tax plan ahead of time, you’re becoming aware of the ways you can reduce your taxes. The idea is that you will keep them in mind while doing what you would have done anyway. A tax plan isn’t designed to alter the way you live your life. You won’t change the way you do things to avoid taxes, merely be aware of the tax benefits of day to day activities like taking those extra college classes or donating to your local Salvation Army.
In addition to uncovering deductions that will shave money off of your tax bill, your tax advisor can also make sure that your taxes are expertly and painstakingly prepared. Doing your taxes comprehensively and properly is key to avoid an IRS audit.
Your personal tax planning session is a great time to revisit other areas of your financial life, to make sure your investments are healthy and appropriate. Look at your portfolio and shed some dead weight if needed and swap from a regular IRA to a ROTH IRA to reap tax benefits. Take a hard look at your retirement contribution and make sure you’re saving enough for your golden years. Think of your personal tax planning as a way to clean financial house. Clear out what you don’t need and maximize on what will truly bring you financial freedom and security.
A personal tax plan will help you with your estate planning. If you have a lot of assets it is a good idea to start parceling them out to family members as appropriate. You can give up to $14,000 in gifts annually to family members. Start looking for creative ways to diversify your wealth and watch your tax bill shrink. Your tax advisor can definitely help you out in this regard.
Managing your deductions and re-evaluating your financial portfolio and retirement accounts are critical aspects of the personal tax planning process. The final piece is timing. There are certain assets, like appreciated securities, that must be sold at precise times to avoid massive tax bills. If you’re off by as little as one year, you’ll stand to lose major money. Additionally, retirement accounts have hefty withdrawal fees if you remove money prematurely. There is no consistent rule so it’s best to check with your accountant and tax advisor to make sure you’re doing the right thing.
Many people hold off on thinking about their taxes until the very last minute. Taxes are an unpleasant, necessary part of life and it’s too easy to procrastinate until it’s absolutely necessary to deal with them. Resist the urge to put off your personal tax planning and you’ll be far happier in the long run. It’s not as scary as it seems and you could be very pleasantly surprised when your tax advisor tells you exactly how much you can stand to save!
With the complexities of the tax code, personal tax planning is not something you should take on alone. Find competent professionals that have helped many others just like you. To get the biggest return on next year’s taxes, why not call the professionals at Advanced Accounting? We have years of experience, multiple certifications and a track record of excellence and great service. Discover how we can help you today with a wide range of services and our unparalleled dedication.