January-October Financial Review for Tax Planning: Why It’s Beneficial

tax planning

 

Financial reviews evaluate your financial position. Since everyone’s tax planning needs are different, each review focuses on what is most important to you. 

 

Financial reviews help with future tax planning. This gives you structure in your transactions and minimizes the legitimate amount of tax you pay. Tax planning is a great tool to use for businesses, wills, retirement plans, and properties. 

 

Tax season is a stressful time of year for everyone, but everything becomes easier when there is a tax plan in place. These 4 concepts are a part of the tax planning process and will benefit your business. 

 

tax planning

 

Utilize Tax Deductions and Tax Credits

 

Both tax credits and deductions reduce your tax bill. Tax credits are more beneficial, giving you a dollar-for-dollar reduction of income tax that you owe.

 

Tax deductions are expenses that are subtracted from your taxable income. Expenses include contract labor, supplies, and depreciation. These expenses must be for business use, and not personal use. You should keep track of your tax deductions throughout the year. 

 

Decide on Standard Deductions or Itemizing

 

Many taxpayers use standard deduction because it is much faster. Standard deductions are a flat rate deduction. The government provides set amounts of standard deductions each year based on filing statuses. 

 

Itemizing is a longer process, but typically ends up with more deductions. Itemizing takes your tax deductions one by one.

 

Determine Your Tax Bracket

 

Knowing which tax bracket you fall in is vital because it gives you knowledge of your current standing. It also helps you plan for the future. The higher your income is, the more money you may have to pay in taxes.

 

Keep Track of Your Tax Records

 

The most important part of tax planning is keeping records of past tax returns and documents. Stay organized so it is easy to find the paperwork. If you work with a tax preparer, it helps them keep you on track to filing taxes on time. 

 

It can take the IRS up to three years to decide whether to audit your return, so hold on to your records for at least that long.

 

Financial Review for Tax Planning

 

PL Consulting is experienced in all facets of tax planning and financial reviews. We structure tax plans to cut the legitimate amount of tax you pay. We help plan your tax obligations for the entire year, so there are not any surprises at tax time. We can explain the tax structure so you know where your money is going. 

 

Whatever your financial objectives are, we will discuss them with you and then deliver a plan to help you achieve them. We are here as your business’s go-to resource when you have questions about bookkeeping, taxes, and finances. Our services are customized to each of our clients and their business plans. 

If you have questions about why financial reviews for tax planning is beneficial, call us at 410.764.3731 or visit us at https://www.plcfo.com/contact/.

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