4 Proactive Tax Planning Tips
For many people, tax season is one of the more stressful times of the year. April 15 hangs over the heads of adult Americans like a dark storm cloud. Why? Because taxes are time-consuming and complicated. So, tax day continues to be a day that we'd rather put off.
One of the biggest reasons taxes gives us anxiety is because we "forget" about it all year. Then, we wonder why we owe the government money or get mistakenly excited over receiving a large refund. Granted, a refund always feels nice at the time. Yet, if you considered taxes as part of your financial planning throughout the year, you could have invested that extra money instead of loaning it to Uncle Sam.
Tax planning isn’t just about filing once a year. It’s also about protecting your wealth and assets for the future, including retirement and estate planning. This is where having a relationship with a comprehensive financial advisor and tax professional can help clear the fog of your financial situation.
Here are four tips to remember when planning for taxes.
Estimate your income for the upcoming year to figure out your estimated taxes. That way, you won’t pay too little or too much, thereby optimizing your wealth during the year.
The most popular ways to save are through charitable contributions and year-end tax-loss swapping.
Decrease your taxable income through future savings like HSAs, 401(k)s and IRAs.
Don’t forget that taxes aren’t just a once-a-year-occurrence. Consider taxes when you sit down to do your estate planning, are considering big purchases, and when selling securities.
Did you know, according to the IRS, it will take you between 13 and 22 hours to prepare and file your own taxes? And this doesn’t include that nagging feeling of wondering if you’re doing it right.
We understand how time-consuming and daunting the tax task can feel, which is why we recommend individuals proactively consider taxes as part of their wealth and retirement income plan.
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Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein. Past performance is not indicative of future performance.
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