Tax planning can benefit you in more ways than simply finding how much tax you owe. A solid tax plan can provide a road map to help maximize tax saving strategies while accomplishing financial goals. Here are just a few of the ways that tax planning can be beneficial:
1. Understanding your bracket. The tax tables divide the various filing statuses and income levels into brackets. When it comes to tax savings every little bit can help and a seemingly small changes to income can make a big difference in tax due. Knowing how close to the floor or ceiling of a particular bracket can be useful in making decisions before year end.
2. Finding hidden tax deductions and credits. The tax code is immense and constantly changing. Without consulting with a professional, you could be missing out on credits and deductions that you already qualify for or that you could qualify for if you knew about them.
3. Planning for retirement & education. There are so many different retirement vehicles. Which one is right for your situation? Tax planning can help here. Oftentimes, what works in one year may not be the right solution for the next year. Tax planning can help answer questions about where, how much, and by when to make contributions.
4. Planning for tax payments. While it may not be enjoyable to pay taxes, they are a fact of life that has to be dealt with. Tax planning gives you the knowledge you need to be better prepared to make payments as they come due.
If you are ready to get serious about your tax plan, give us a call and see what we can do for your situation.
Sam Clegg, CPA