Managing Your taxes
Proper planning throughout the year can save you headaches … and money!
(PRWEB) February 14, 2005 -- At this time of the year a great deal of consideration is given to preparing and submitting your tax return by the deadline. I should point out that there is a huge difference in preparing your return and the adoption and implementation of a tax efficient strategy. The first difference is found in the fact that tax preparation is year-to-year where tax strategies are normally built around several tax years to reduce the overall rate or amount of tax.
Here are five tax reduction strategies for your consideration:
Convert taxable income to non-taxable income. Some investment vehicles allow you set aside a portion for your income for the future, while minimizing your tax burden now. You could consider tax-free investments that simply net out a higher return than the after tax return on other investments and/or you can contribute to IRA accounts. Roth IRAs are a great way to accumulate wealth on a tax-free basis and pull out future income tax free as well.
Defer taxes to a subsequent year. Several outstanding investment vehicles allow you to save money pre-tax. Investing in your employers retirement plan (401-k, Thrift Savings Plan, 403-b) all make investment and tax sense. Self-employed people could elect a SEP or SIMPLE investment structure. All these investments will keep you focused on the future while managing your current taxes.
Shift income to someone in a lower bracket. Giving some of your income to children or grandchildren over age 13 through investment assets can help reduce your tax burden as well.
Deducting expenses. Many people simply overlook or are unaware of deductible expenses. Alimony, business expenses, state and local income taxes, mortgage interest are all great examples. Charitable contributions and financial advisory fees can be deducted subject to IRS guidelines.
Timing income and expenses. Taking a look into the next several years projecting income and expenses. This can help identify opportunities to pay the lowest taxes over that time. Selling assets for a gain when income is lower or increasing your charitable contributions when your income is higher are simple but effective strategies.
Above all, keep good records. As your financial situation changes, so will your tax situation. By keeping good records together and current you will simplify your yearly tax preparation and be able to better review and revise your tax plan for the future.
About Retirement Plus, Inc.
A full-service financial planning and wealth management firm, Retirement Plus, Inc. provides financial guidance for the future you deserve. Whether you are just starting out on your financial journey, working hard to accumulate assets for the future or seeking to preserve, protect and enjoy the wealth youve already accumulated, Kansas-City based Retirement Plus, Inc. can help you along the way. Offering independent, fee-based services, we serve people from all walks of life. A host of free financial information is available on our Web site, www.RetirementPlusInc.com. To speak with Randy Hallier, CFP® or one of our professionally trained financial consultants, contact us at 913-402-0313 or rpi@aboutrpi.com. If you have a desire to reduce your tax bill let us know and well be happy to assist you.
Contact:
Randy Hallier, CFP®
(913) 402-0313
rpi@aboutrpi.com
www.RetirementPlusInc.com
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