Tax Planning Goals

Shifting income and transforming deductions from nondeductible to deductible status are beneficial ways to lower your tax bill. If you own a business, you can control income and expenses easily. For example, you can use a cash accounting or hybrid cash-accrual method and postpone billing customers until the new year to defer income in years when your income places you at-risk of falling into a higher tax bracket. You could also buy capital equipment and perform essential repairs and upgrades to keep from paying too much tax. If your business is slow in any given year, you can accelerate income or defer making repairs or buying capital equipment.

What working professionals need to do is to gather valuable documents now. The paperwork is the deciding factor between a refund and an outstanding bill to pay. The paperwork to gather includes the W-2 forms, 1099 forms, PayPal copies, business expense receipts, investment papers, charitable donations documents, and proof of health insurance. A major reason taxpayers miss out on deductions is a lack of

Invest Your Refund: Invest your tax return to maximize the money you receive. Adding your return to your 401(k), opening an IRA and funding it with your return, or investing the money in a college savings plan is an excellent way to invest in your family’s future.

During tax season many American lives are complicated and literally put on hold due to the stress and demand of taxes. Americans discover the tax code to be terribly confusing and frustrating, and often citizens become very stressed. Many turn to alternative solutions of tax configurations to take the load off of them, but come to realize that these services are rather expensive and sometimes inaccurate. Our country’s standard of living has also been decreased as a result of our nation’s taxes. Tax percentages are so elevated and exemptions are so minimal, it is virtually impossible for anyone to prosper and get ahead in our world today.

Another option is to have children. They can cost a lot to raise, but each child gives you a tax exemption. You can claim an exemption of $1,000 for each child on your tax bill. If you have to hire a baby-sitter for a child under 13, you may be able to deduct up to 35 percent of the cost. IN addition, the Lifetime Learning and Hope credits can give you additional tax breaks if you are paying for your child to go to college

These deductions are limited to a certain, age-dependent percentage. If you’re under 65, then you can deduct expenses greater than 10% of your adjusted gross income (AGI). If you’re 65 or older, this is cut down to 7.5% of your AGI. You can also itemize any charitable donations you made within the past year. Helping political campaigns or needy families aren't considered “charitable”, and the amount you can deduct depends on how you make the donation. If you donate in cash, then the deduction can be up to 50% of your AGI. If you make a property donation, then it’s 30%. A final form of itemized deductions takes the form of small expenses, but you can only deduct the portion that exceeds 2% of your AGI. These deductions can include uniform expenses, business or education expenses, professional journal subscriptions, fees for tax preparation, or other similar

The Tax Planning Activities worksheet can help Shelby to consider what tax savings she is eligible for and how to keep her from having to pay tax penalties from year to year (Kapoor, Dlabay, & Hughes, 2014). This spreadsheet is about making sure that she remembers to cover all the tax savings information so that she can make better decisions toward her financial planning. To start with Shelby will need to review her filing status because these may change due to life situations and the withholding amount may fluctuate due to the changes in her life that may occur. Also, if she finds herself owing a significant amount of taxes at the end of the year, she may want to consider making quarterly payments for the next year, so that it does not

I’d like to start by discussing your strategy related to income tax filings. Income tax is paid not only to the federal government when you file your tax return, certain states may also expect you to pay

With a tax credit, you get to subtract that amount from your tax liability. If you made $50,000 and owe $5,000 in taxes, a tax credit of $1,000 means that you now owe just $4,000.

Make Tax Prep A Year-Round Undertaking: Lower your income tax liability by making tax prep a part of your daily routine. Every financial decision you make will impact

Annual Spending - There are many expenses which you may not have included in your monthly budget, which are annual. These expenses include: back-to-school shopping, birthday and holiday gifts, and vehicle registration. Making a list of all annual expenses, dividing that number by 12, and adding it to your budget will help keep your budget on

Any method of decreasing taxable income in a payments to tax collecting entities, including state and federal government. The most common type of tax shelter is an employer-sponsored 401(k)plan.

The major reason taxpayers exercise standard instead of itemized deductions is that taxpayers don't have to keep track of every potential tax deductible expense throughout the year. Plus, a lot of people find the standard deduction amount to be fairly generous and usually greater than the total they could reach if they added up all of

Reforming or limiting itemized tax deductions for individuals has gained the interest of policymakers as one way to increase federal tax revenue, increase the share of taxes paid by higher-income tax filers, simplify the tax code, or reduce incentives that might lead to inefficient economic behavior. However, limits on deductions could cause adverse economic effects or changes in the distributional burden of the federal income

Here are the key steps you need to take in order to best manage your income tax.