Now that the tax deadline has passed, summer is the perfect time to begin preparing a tax strategy for the current year. Too many taxpayers wait until the last minute to tax plan and sometimes it is too late implement some of the best strategies.
The primary goal of tax planning is to minimize tax liability. Both individual taxpayers and business owners can benefit from building a tax strategy, which often includes deferring or shifting income and planning for deductions and investments.
Tax planning creates various financial scenarios, projects the tax consequences and develops tax efficient solutions – or tax strategy. Financial decisions can affect everything from which tax bracket a taxpayer is in to the types of tax deductions the taxpayer is qualified to take. Another benefit is that tax planning information can lead to better decisions, such as how much income to draw as a business partner, when purchases should be made and the most advantageous timing of investments.
Five steps to building your strategy
- Carefully review your previously filed tax return. Is there a schedule, deduction or liability that raises questions for you?
- Consider any anticipated changes and determine how the 2018 Tax Laws and Jobs Act will affect your tax liability. Your tax professional can help you navigate these changes.
- Take a closer look at your budget, bills and deductions. Are you taking advantage of programs such as an insurance plan that offers a Health Savings Account, H.S.A.?
- Review your investment portfolio. Have you maximized your tax savings with tax deferred products? A good example is the purchase of an Individual Retirement Account (IRA). The purchase usually will reduce a tax liability while at the same time the money continues to grow for the future.
- Get organized! Develop a system to record your expenses, file your receipts and to organize your paperwork during the course of the year. This is time well spent because in the end it saves you time and money.
As certified public accounting and business advisory specialists, the professionals at Steven Alpinieri CPA, An Accountancy Corporation, can help you plan and prepare for the 2018 tax year with a personalized strategy. If you would like to guidance in developing a tax plan, Steven Alpinieri CPAs can help. To learn more about how to strengthen your tax position or your corporate accounting, please visit www.sandiegocpasteve.com or call the office at (858) 230-6610.