Personal Tax Planning

A lot of money is “lost” through taxes, and personal tax planning ensures that a person gets the most out of their finances while paying less tax. At the end of the day one will be sure of saving up quite some amount of money and hence securing their finances.  There are ways that one can plan their finances in order for them to minimize the amount of taxes that they are to pay. There are a few ways in which one can achieve this and they include the
reduction of one’s income, increasing deductions and making use of tax credits.

The reduction of income

One of the most important elements that will determine the taxes on one’s income is the Adjusted Gross income. This element plays a very important role in finance. One needs to realize that the higher one gets in terms of their income, the higher the tax they are to pay. With AGI it simply means that you need to add up all your income and subtract any
adjustments. The examples of the adjustments made to your income include making contributions towards retirement plans including the 401(k) and other similar plans. The adjustments will ensure that your income is lower hence lowering
your tax.

Increasing tax deductions

The best way to ensure that a person is increasing ones taxable deductions is by itemizing the deductions. These include the state taxes, mortgage interest and gifts to charity. Once you keep track of the itemized deductions it is important to compare the expenses to the standardized deduction. This will largely depend on the number of dependents one has. The more the dependents the higher the standard reduction one is expected to have. This is one of the strategies that used in reducing the amount of income that is subject to being taxed.

Tax Credits

Tax credits can work to reduce one’s taxes. Some of the people illegible for tax credits include college students who get tax credit for their first two years and for those that commit to taking a lifetime tax credit. The course one takes does not really matter. One can also reduce taxes by avoiding making withdrawals from their retirement plan. This will
ensure that the tax bill is lowered on your finances.

One can also increase their withholding which will keep of any owing. Through this one is to get a larger refund as compared to what would have been taken from their paycheck during the year.

Author’s Bio: Val Anne is an in-house writer from Franklin Debt Relief, a company specializing in programs for people with high credit card debt.

Tax Deductions Can Help To Improve Your Bottom Line

Small Business Often Overlooks Tax Deductions

You can have a successful tax season in your small business if you plan all round the year so that the deductions are maximized. This requires that tax matters should be kept in mind at all times, and you must constantly look for methods of reducing your bottom line, while continuing the profitability of the company.

Expenses for Start-Up

The expense of starting a business is quite often overlooked by small businesses and this can give one quite an advantage when the tax season is being considered. It is possible to deduct the expenses incurred for overhead,marketing and other expenses that are related and this can be done for a period of five years after starting the business. However the deduction of such expenses is only allowed after you have actually started the business and cash flows have commenced.

Education and Training Has To Be Continuous

A continuity in training and education, makes you eligible to deduct the expenses incurred for this. Attending a conference on new trends for treatment of cancer in horses allows a veterinarian who specializes in treating horses to deduct the expenses of attending that conference. As the conference is related to the field in which the veterinarian is practicing this seminar can be a part of the deduction form the yearly tax. However if he is not practicing in that field and only treats smaller animals, he would not be eligible for any deduction. The rules for the classes that qualify the deduction are quite strict.

Fees for Professional Services

Any professional fees that you pay to your accountant can be deducted from taxes.If however the work is for future years, the benefit has to be spread out over the term envisaged. If you have hired an architect for designing a building that may take two years to construct,the architects fees have to be spread over the period during which the building construction takes place.