Posted on Aug 2, 2016

Tax Planning Tips

For some reason, tax time always seems to be lurking around the corner, worrying business owners and individuals alike. While it is true that you shouldn’t take your tax obligation lightly, planning in advance will help ease the stress of tax time from your life.

Don’t Wait to Start Tax Planning

Procrastination is the downfall of any personal project. If you wait until the last minute, the stress will hurt your personal health and business. Everyone knows that April 15th is Tax Day. By getting on top of your return early, you will have more time to check over your work and in turn will make fewer mistakes. Unlike others who will be rushing to figure out all the required paperwork, you’ll be spending Tax Day worry free.

Look Back

Review your previous year’s return. It is helpful to see how you filed last year so that any necessary changes or improvements can be made the upcoming year. Reviewing your previously filed documents will also help offer a lot of insight into what you accomplished last year and where you are heading in terms of income.

Fund a Qualified Retirement Plan

The ultimate goal for anyone is to retire, with no sense of worry. If you’re going to have enough saved, then a plan is a necessity. There are many ways to go about accomplishing that but a main one is to make sure you invest in your 401(K). Try to maximize the amount allowed to contribute to your companies 401(K). Talk to an expert to fund a continual plan. The earlier you start the easier it is later in the year.

Plan Charitable Contribution

Americans are actually giving more money in recent years to charity. Giving to charities is a good way to help your community and simultaneously find tax breaks. However, make sure you give to a qualified charity, and remember that donations to individuals don’t count as deductions. When donating, make sure you receive a receipt to include in your tax organizer. Lastly, there are limits to charitable giving deductions ratio so double check your deduction limit before writing the check.

Defer your income

Deferring income makes sense only if you’re going to be in the same or lower tax bracket as the previous tax year. Don’t get hit with a higher tax bill next year by receiving additional income. This option might also help if your employer gives out bonuses at year-end.

Record keep

It’s tedious, but the IRS won’t doesn’t allow estimates, so it is vital to make sure and keep track of your expenses. Keeping a record of appointments, emails and summaries will only help in dealing with the IRS and also keep organized on activities throughout the year. Most small businesses struggle with record keeping and it leads to substantial losses. Don’t let you or your company fall behind. Always stay on course with record keeping.

“Green” Tax Breaks

The new popular lifestyle is to go “green”. To make it seem more enticing, the government has put in place a system to reward individuals and businesses for putting cleaner and more environmentally friendly devices in your workplace and home. The government will provide tax incentives for putting up solar panels and renewable energy systems. This will help save the planet as well as putting some more green in your pocket.

Keep up with Tax Law changes (In Congress)

Every year, congress makes changes that affect the daily lives of Americans. Be sure to stay attuned to all decisions that could potentially affect your finances. Watch local and national news to see if there have been any changes to when and how to file taxes or major reforms that may potentially affect the tax bill year to year.

Remember your State and Local Tax duties

The national timeline is often parallel with the local timeline in terms of taxes. However, local governments have different filing and payment responsibilities with various income, property, and sales taxes. Make sure you are keeping up with out of state expenses and that your business is in tune with what your local responsibilities as well.

Avoid the “kid” tax

There are many tax breaks that parents receive. To learn more – check out our blog article: Ten Tax Breaks Available for Parents.