Many taxpayers feel that ever familiar feeling of dread come tax time knowing that they will be hit with a high tax bill. Instead of resting easy that you or your business has had a good year and your salary or profits have increased, you are painfully aware that your tax bill will also increase in tandem. To help alleviate some of the inevitable surprises, frustrations, and importantly, the expense of high tax bills, Tax Planning by the experts at CPA Accounting & Tax Services can help you save thousands and provide you with a sound strategy and peace of mind. Here are the top 3 ways Tax Planning can save you thousands from the dedicated team at Orlando based CPA Accounting & Tax Services.
SETTING GOALS AND FINDING THE HIDDEN SAVINGS
Where would you like to be 5, 10, or 20 years from now? With tax planning, a holistic look at your finances and goal setting is used to determine the best tax strategy for you. We also find the savings, such as items commonly overlooked items that include:
Deductions – By leveraging deductions you can lower your taxable income. Some commonly overlooked deductions include travel expenses, marketing expenses, operating costs (i.e. utilities, phone, and internet), shipping expenses, mileage expenses, technology purchases, conference/trade show attendance, insurance, and maintenance costs.
Tax Credits – Similar to deductions in that they lower your tax obligation, tax credits lower the actual amount you owe in taxes. Some examples of tax credits include Child Tax Credit, Business Energy Tax Credit, Lifetime Learning Credit, and Electric Vehicle Tax Credit.
Loopholes – There are specific legal items related to business operations that are nebulous and considered loopholes that may afford your business with additional tax savings. These will vary depending on the type of business and how the business operates to determine if your business is able to take advantage of loopholes in the tax laws.
RETIREMENT PLANNING
Retirement planning can help you save big both now and in the future. It can lower your Adjusted Gross Income (AGI) by the contributions you make to your 401(k). These contributions can be taken before taxes, which lowers your AGI. You can also lower your AGI through adjustments, that include:
1. Contributions to a traditional IRA — up to $6,000 annually.
2. Contributions to a self-employed pension plan like a SEP or SEP IRA.
3. Contributions to a health savings account.
4. Self-employed health insurance plans.
5. Self-employment taxes, which consist of both social security and Medicare contributions.
6. Education expenses, such as tuition and fees. This can reduce your income as much as $4,000. Plus, student loan interest deductions allow up to a $2,500 write off.
SETTING UP THE RIGHT CORPORATE ENTITY
There are four main types of business structures: sole proprietorship, partnership, limited liability, and corporation. Each structure has different tax, income, and liability implications for business owners and their companies.
To ensure you are minimizing your tax obligations, it is important to set up or change your business’s structure to ensure that your business is operating as the correct entity and effectively leveraging the appropriate tax savings. Filing the correct corporate entity can save you thousands.
Proper Tax Planning can save you thousands. Contact the professionals at CPA Accounting & Tax Services to help guide you through tax season and beyond. We specialize in Business Accounting Services, Individual Tax Services, International Tax Services, Tax Planning, and Tax Resolution Services. We have offices in Orlando, Florida and serves clients worldwide. Find out how we can serve all of your accounting needs by contacting us today: www.cpaaccounting.biz