There’s no need to be afraid of April 15th if you plan your taxes correctly throughout the year.
You can reduce the chances of unpleasant surprises by monitoring your pay and deductions on a regular basis, and taking advantage of tax-saving opportunities.
But if you’re like most people, you don’t think about your taxes until the filing deadline — and by then, it’s too late to make any changes.
Your best bet is to plan ahead — which is why we’ve put together some tips on how you can keep more money in your pocket throughout the year through tax planning.
Let’s start with a clear definition of what tax planning is.
What is Tax Planning?
A lot of people think that tax planning is something you do at the end of the year to make sure your return does not get audited, however, it is much more than that.
Tax planning involves thinking about how all of your income and deductions relate to each other, so you can minimize what you owe in taxes throughout the year instead of waiting until April 15th.
The goal is to strike the correct balance between reducing your tax burden and saving money on taxes by maximizing income and investment possibilities.
If you do your best to plan ahead, it’s possible that most of the time you won’t have any tax refunds or owe money at all when filing year-end taxes.
It just takes a little effort and regular monitoring — which, of course, is where we can help!
How Tax Planning Adds Value for You
While following the tax laws is most important, you can’t just stop there. Just filing your taxes by itself will not ensure that all of your deductions are being maximized at their full potential.
Tax planning involves taking a look at what’s going on in each area of your life throughout the year so you have enough time to adjust your strategy and maximize your deductions.
A good tax planner will be able to help you get the most out of all of your investments, including 401ks, retirement accounts, stocks, or bonds — a place where you can sock away money on a pre-tax basis. You may also find that some expenses are deductible such as home improvements, tuition, and job search expenses.
Tax planning also involves keeping track of your paychecks to make sure you are not leaving money on the table when it comes to deductions or allowances that can be taken off of each check through proper withholding strategies.
So if you want to keep more money in your pocket throughout the year rather than waiting until April 15th, tax planning is definitely for you!
Why Is Tax Planning Necessary?
Tax planning is necessary because it helps you avoid unpleasant surprises at the end of the year.
For example, if your income fluctuates throughout the year or you have unusual expenses that are not deductible in general (such as vehicle registration fees), proper tax planning could be very beneficial to you.
It’s also important to consider things like self-employment or owning real estate, which can have significant financial implications for you.
If you own your home, then there are lots of deductions that may be available to help offset the cost of mortgage interest and property taxes — but only if you plan correctly!
The same goes with income from side gigs like babysitting or renting out a spare room: it’s important to take advantage of all deductions and allowances, but only if you plan correctly.
Since there are so many variables that come into play when planning for taxes, the best way to make sure your investments and expenses work in your favor is by seeking help from a professional who can offer expert guidance throughout the year.
If you haven’t already, give us a call to set up an appointment so we can help you identify the steps most useful for your unique situation and show you how to get started or boost your progress.
Tax planning is an ongoing process that shifts and evolves as your wealth grows and changes. We seek to bake tax planning in every aspect of your financial life to account for these changes and capitalize on important opportunities.
With our team’s guidance and support, you’ll discover that tax planning will become a key driver of your successful investment strategy.