Many people dread tax season. Depending on your tax knowledge, it can be very overwhelming and confusing. But with a proper tax planning strategy in place, you can have a stress-free tax season!
Although it can be beneficial to hire a Certified Public Accountant (CPA) to assist, there are plenty of tax planning strategies you can take advantage of on your own.
With tax planning, you can find different ways to reduce your overall tax bill — allowing you to receive your maximum return. Follow along as AA Tax & Accounting Services walks you through the basics of tax planning for you to take advantage of this coming tax season.
What is tax planning?
One of the most significant stressors in life is finances, so tax season can be daunting. Unfortunately, filing your taxes is inevitable, which is why you must have a helpful tax planning strategy in place.
Tax planning refers to the process you use to minimize the amount of taxes you will need to repay at the end of the year. While there are a few ways for you to do this, the most common methods are reducing your overall income, increasing your number of tax deductions throughout the year, and taking advantage of certain tax credits.
By taking advantage of these tax strategies, you will better understand your finances and where your money is being spent.
Tax planning strategies for individuals
If you’re new to tax planning, we’ve put together a quick guide on a few basic tax planning strategies that you can utilize when filing your tax return this year. Although this is a great place to start, you’ll begin learning new variations of these strategies as you become more confident filing your taxes, which will help you save even more money.
Understand your tax bracket
Do you know what tax bracket you fall into?
As you head into tax season, it’s helpful to know where you stand. Remember that the tax bracket you fell into last year may be different from this year!
Reduce your income
When it comes to your taxes, one of the most important factors is your adjusted gross income. Your adjusted gross income refers to the income you have remaining after you have made adjustments such as contributions to your 401(k), IRA accounts, paying off student loans, and more.
Take note of the different adjustments that can be used to reduce your income.
Increase your deductions
Along with reducing your income, you may also want to take advantage of increasing your taxable deductions for the year. Deductions can include property taxes, mortgage interest, charitable donations, job expenses, investment expenses, state taxes, and more.
Be sure to keep an organized record of any deduction expenses accumulated throughout the year, so they’re available when filing your taxes.
Take advantage of tax credits
Throughout the year, different tax credits may become available that you qualify for. These tax credits work like incentives to help you reduce the amount of money owed on your tax return. Remember that tax credits do not lower your taxable income but can be deducted from the total owed.
Tax consulting services in Cedar City, Utah
Do you still have questions about tax planning?
If so, AA Tax & Accounting Services can help you navigate the tax planning process. No one should go into tax season with their questions unanswered. Our team of tax consultants has the experience of navigating the most effective strategies for maximizing their deductions and tax credits with our tax consulting services.
The AA Tax & Accounting Services team can help you execute the right tax strategies to save you money. Contact us to schedule an appointment.