Tax Planning Keeps More Of Your Money In Your Pocket
Are you concerned about how much you pay in taxes? If so, you are not alone. One of the most common concerns we hear from our clients is that their tax bill is too high. And their worry isn’t only about their current tax bill, but rather about the taxes they will pay in the future.
The United States is currently in a fairly low income tax situation. However, very few people believe that will be the case for much longer. With large government deficits and the need to protect the Social Security program, many experts expect tax rates to eventually climb much higher. This could be very bad news for you – unless you do something about it now!
Proactive Tax Planning Is A Must
In order to control your tax bill you must plan ahead. Proactive planning is the process of implementing strategies now to reduce how much of your cash flow and wealth is eaten away by income taxes. If done right, you can keep more of your money where it belongs – in YOUR pockets!
Our idea of proper tax planning is to use the existing tax laws to your advantage. We only recommend strategies that are approved by the IRS and our recommendations will always be within the limits or guidelines imposed by the IRS. What’s more, we will work with your tax advisor(s) in a coordinated matter to make sure our recommendations in your best interest and so that they are able to be involved in the planning process.
Does Your Tax Situation Need A Band-Aid Or A Tourniquet?
If your tax bill can be compared to a bleeding wound then the first assessment should be to determine what is needed to close the wound. For relatively minor tax liabilities we can use run of the mill strategies to help fix those problems. That’s like applying a tax “band-aid”. But if you are experiencing a huge tax liability now that is likely to grow in the future then a tax “tourniquet” might be needed. Strategies that are designed to save a larger amount tax are more complex and require more in-depth analysis.
We have the expertise to assess your situation to see what strategies will be most appropriate for you. We can prepare a tax plan for you and illustrate how much money you can save in taxes by using the recommended strategies. What’s more, we will also have your accountant or CPA also verify our projected tax savings.
Shrink The Tax Bill By Shrinking Taxable Income
The whole idea of a proper tax plan is to shrink the amount of your income that is subject to taxation. Not all income is treated the same by the IRS and so it is critical to know the rules about how to shift a portion of your future income to a type that receives favorable tax treatment.
But even more importantly, it is paramount that any and all tax planning you employ must not be done for the sole purpose of reducing your tax liability. The reason for this is that any strategy you employ solely for the purpose of paying less in taxes is subject to nullification by the IRS. In other words, all tax strategies you use must also have a secondary purpose.
Here is an example. Suppose you defer part of your salary to a 401(k) Plan or other employer retirement plan because it gives you a tax benefit in the same year. There is another benefit to the retirement contribution – you build up a cash value that can provide retirement income.
All of the tax planning we do for our clients is IRS-compliant and will not be used exclusively for the purpose of reducing your tax liability.
ARE YOU READY TO CREATE A PLAN TO REDUCE YOUR TAX BILL?
Getting started is easy. The first step is to let us know how we can help you. Just fill out the simple contact form below and we will be in touch with you right away – or just call us at 480-699-5540.