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What type of Tax Planning do I need? 5 most common items

As the tax season ends, individuals and businesses are beginning to consider their tax liabilities and look for ways to minimize them in the upcoming year. Tax planning is a critical component of financial management, and it involves analyzing your financial situation to identify opportunities to reduce your tax burden. In this blog, we will explain the type of tax planning work we do and provide five things to keep in mind when considering tax planning.


Item 1: Run tax projections and estimate your tax liability


Before you can start planning your taxes, you need to have an idea of how much you will owe. Tax projections involve analyzing your income, deductions, credits, and other factors that may affect your tax liability. By estimating your tax liability, you can identify opportunities to reduce your tax burden.


Item 2: Assess the short-and-long term impact of various tax strategies on your finances.


Tax planning involves considering the impact of various tax strategies on your finances. For example, contributing to a retirement account may reduce your tax liability in the short term, but it may also reduce your retirement income in the long term. Our tax planning team can help you assess the short and long-term impact of various tax strategies on your finances and recommend the best approach.


Item 3: Consider opportunities to minimize or offset taxes.


One of the primary goals of tax planning is to minimize your tax liability. There are several strategies to achieve this, including taking advantage of tax deductions and credits, deferring income, and investing in tax-advantaged accounts. Our tax planning tools can help you identify opportunities to minimize or offset taxes and create a customized tax plan that fits your financial situation.


Item 4: Work with your CPA to ensure you are taking advantage of all tax minimization strategies.


Tax planning is a collaborative effort between you and your CPA. By working together, you can ensure that you are taking advantage of all tax minimization strategies available to you. Our tax planning tools work in concert with your CPA to identify opportunities to reduce your tax liability and maximize your tax savings. Each year we communicate with your CPA via a Tax Letter so they are prepared for things like necessary tax documents, cost-basis, or any tax-related activity during the year. Let your CPA continue to do their tax preparation and we will do the tax planning.


Item 5: Analyze your tax returns to determine whether there are tax planning opportunities

Finally, tax planning involves analyzing your previous tax returns to determine whether there are opportunities to reduce your tax liability in the future. Our tax planning tools can review your tax returns and identify areas where you may be able to reduce your tax liability in the future. Each year we review your tax return and prepare a Tax Report, Tax Explainer, and Scenario Analysis for our clients


In conclusion, tax planning is a critical component of financial management, and it involves analyzing your financial situation to identify opportunities to reduce your overall tax burden. By running tax projections, assessing the short and long-term impact of various tax strategies, considering opportunities to minimize or offset taxes, working with your CPA, and analyzing your tax returns, you can create a customized tax plan that fits your financial situation and minimizes your tax liability.


The one takeaway is that tax planning is not about paying the least amount of tax "this year", but about making a tax plan for "every year" as you move to and through retirement to lower your overall tax burden during your lifetime.


Contact us today to learn more about our tax planning services and how we can help you achieve your financial goals.


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