Everyone knows that they have to pay taxes, but very few people know when to start tax planning. If you’re in the same boat, you came to the right place. In this article, we’ll tell you everything you need to know.
What is Tax Planning?
Tax planning is the process of you and your tax professional utilizing strategies to help you limit your tax liability. They will look at the areas that you are most liable for taxes, and they’ll walk you through the process.
Tax planning is broken up into a few different categories.
- Income timing: Making a bunch of money really fast isn’t always a good thing. In some cases, you might want to push back potential earnings (as long as you have control over it) to help your tax position.
- Selecting investments: From real estate to the stock market, there are a lot of ways to help reduce your taxes with the right investments. Your tax pro will be able to make suggestions that will reduce your taxable income on paper and therefore reduce how much you’ll have to pay in taxes.
- Time what you buy: Another part of tax planning is understanding when to make big purchases. Certain purchases have tax implications based on the time of year, your location, and the size and type of the purchase.
- Donations to charity: If you’re planning on donating to charity, you should discuss it during your tax planning meetings. Charitable donations will decrease how much you’ll have to pay in taxes, and it can really help you out.
When to Start Tax Planning
The best time to start tax planning is today. The earlier you start, the better you can position yourself when the time for filing comes along. Remember, decisions that impact your taxes might take weeks or months to come to fruition. That means that being proactive with your tax planning can have a direct result on the money you save.
Should I Do My Own Tax Planning?
For most people, the answer is no. Even people who think that their situation is straightforward can be forfeiting a ton of money since they don’t know the ins and outs of the tax code. You don’t do your own dentistry work, so why would you do your own taxes?
The best idea is to work with a CPA, with their knowledge and expertise, you can rest easy knowing that you're in good hands. Certified public accountants are required to be properly licensed and meet certain education requirements. They can devise a tax planning strategy that suits your needs and goals, and you can focus on what matters most.
Get Started Today
Tax planning works best the sooner you start. Having a great tax planning strategy can allow you to take advantage of any and all deductions and credits as a result of a proactive approach. You don't want to miss out on any potential savings just because you're only focusing on taxes once a year. This year-round service ensures that you start seeing the results you want when it comes to your tax savings. With the right partner, tax planning is painless. Contact our team today to discuss how we can best meet your tax planning needs.