Who is winning your Income Tax Tug-of-War?
When was the last time you or a tax professional looked for opportunities to lower your tax bill? Unfortunately, most Americans simply take their tax forms to their tax preparer or buy a copy of Turbotax and mindlessly record what happened during the year. And then they file their taxes, all the time wishing they were able to keep more of their hard-earned money. This happens year after year! Wash, rinse, repeat. Little thought is given to the actions people can take to lower their tax bill now and in the future. Sound familiar?
But what if there was a way to plan for and maybe even lower your taxes? Here is the process we follow to put our clients on better financial footing:
Use pro-active planning. Unfortunately, by the time taxes are filed, most of the tax liability is set in stone. There are still a few opportunities to reduce taxes, but many of the opportunities will have already passed you by. This is why it is important to plan ahead.
Understand your tax bracket and use it to help you make decisions. Knowledge is power. Knowing how the tax system works and what you are paying on your last dollar of income can help you make better decisions. Should you have a regular IRA or Roth IRA? 401K or Roth 401K? Should I pay extra on my car loan or my mortgage? Did you know that you pay 10% Federal Tax on your first dollars of income, then 12% on your next dollars, but then it jumps to 22%?
Plan for your tax future! You may be able to take a few steps today to reduce your tax liability in the future. Here are just a few of the techniques we may employ to help you win the Tax Tug of War:
- Using a little known way to make you eligible for a Roth IRA
- Depreciation as your friend during high income years
- College funding options (even if your children are already in college!!)
- Own a business? Lots of opportunity!
We believe clients benefit when they have a knowledgeable team of professionals working together without conflicts and with the clients’ best interest at heart. By working together with tax professionals, attorneys, and other specialists, we are able to provide better solutions. Each professional is encouraged to ask questions of each other to make certain we are providing a great solution for the client.