Tax season is still months away, but that’s not to say there aren’t numerous benefits associated with meeting with a CPA to start tax planning. Taxes can eat up an enormous chuck of your annual income, and if you’re not taking advantage of legitimate, legal ways to reduce your tax liability, your end-of-year tax bill will be much larger than it needs to be. Below are just a few of the tax planning benefits that you should be aware of.
Your tax liability will be reduced
When you meet with a CPA, they can help you understand the steps you can take that can reduce tax liability for capital gains, income, and wealth taxes (if applicable.) They can also help you understand if tax planning can help reduce taxes that might be owed on investment, savings, and pension accounts.
For example, if you haven’t already established a retirement plan, this is something you may want to consider. Why? Because the contributions you make to retirement accounts, such as a traditional IRA, can reduce your gross income. Data from the IRS indicates that individuals below the age of 50 can contribute up to $6,000 to their IRA, tax-free. If you believe your 2021 income will be $85,000, and you contribute $6,000 to your IRA, this will reduce your adjusted gross income to $79,000. For more information about the tax benefits associated with making contributions to one or more retirement accounts, or you’d like more information about how these types of contributions can reduce your AGI, call our office today to speak with a Certified Public Accountant.
Tax planning isn’t just for individuals
Although some business owners think that if they don’t own a Fortune 500 business, that they don’t need business tax planning, this simply isn’t true. Contrary to popular belief, you don’t need to be a multimillionaire (or own a multi-million-dollar corporation) to take advantage of potential tax saving. Not only can tax planning reduce your organization’s tax liability, but you can also reduce what you’ve saved back into your business.
If you haven’t spoken with a CPA about tax planning for your 2021 taxes, now is the time to do it. For more information about how you can save money on your 2021 taxes and/or the strategies that you can use to accomplish that, call Hughes, Snell, and Co., PA today to speak with a Certified Public Accountant. What are you waiting for? Call our office today to get started.