If you are unsure about how you will pay your tax bill each year, it's important to seek customized tax planning to avoid tax debt. Since tax debt can lead to collections calls and visits from an IRS revenue officer, and will eventually mean a lien or levy on your personal property, customized tax planning can help you pay for your taxes before they become a problem.

Not only can customized tax planning keep you out of tax debt, but tax planning can help you lower your tax bill for a business or estate. This means you can plan now to protect your family from a tax burden down the road.

Our team of tax professionals know how the IRS work, and we know how to help you. Watch Top Tax Defenders Director of Operations Priya Mishra explain our process and how we can help you create a tax plan.

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Tax planning is a proactive approach to your tax profile instead of getting sticker shock at tax prep time. 

Customized tax planning analyzes your personal and business tax situation with an eye toward minimizing how much you pay in taxes throughout the year and on Tax Day. It’s an ongoing process rather than one-and-done because your life and tax law changes all the time. 

How Does Tax Planning Work?

Tax planning looks at multiple factors to determine your best way forward, including:

  • Your finances
  • Any financial obligations, current or future
  • Your family structure
  • Business structure
  • Investments 
  • Your expected future income (you, your spouse, and your business)
  • Pending asset purchases, meaning large purchases like a house

With these elements in mind, your customized tax plan takes shape. It will have a strategy that allows you to legally reduce your taxable income by changing the character of your income, timing large purchases (and sales), and creating circumstances that eliminate or defer taxation.

Your plan will cover ways to take advantage of every tax deduction, tax credit, and tax loophole the law allows. For example:

  • Using tax harvesting to offset investment gains
  • Increasing your retirement plan contributions to defer income
  • Bundling expenses such as medical and healthcare to maximize deductions
  • The best timing for capital expenditures so you reap all the tax benefits

Get Help with Customized Tax Planning

Top Tax Defenders can help you with all of that. We handle personal, business, and estate planning. Top Tax Defenders provides expert guidance and customized tax planning services to help you reduce the taxes you pay and increase the cash you (and your family) can keep. 

The Benefits of Tax Planning

You Avoid Debt

The first step is to avoid debt in the first place. Taxes affect so many areas of American life; you may forget that there are different ways to save money. It would be best to keep in mind the tax implications of significant financial decisions like home-buying or selling. The tax laws surrounding real property sales are tough to hear if you are a new home buyer or seller. 

You Have Retirement Tools

It can be hard to save a little money after taxes, so wouldn’t it be better to save it before taxes? Many retirement plans allow you to set aside money before taxes. Then when you take distributions after retirement, you are likely sitting at a lower tax bracket and will pay less tax on those funds.

Retirement planning helps you maximize savings and minimize your eventual taxes by deferring them until later.

Increase Savings

As we mentioned above, if you can defer taxes on what you earn until you are in a lower tax bracket, the savings are significant. You can save quite a bit of money over your working life before being taxed on it.

Tax planning also helps you take advantage of deductions. It enables you to determine whether to take the standard deduction or if it would be worthwhile to itemize.

Manage Finances

Customized tax planning can help you optimize the timing of purchases that substantially impact your tax picture. You can time those purchases to your best advantage.

Examples of Tax Planning Strategies

Plan for Retirement

Save money in pretax withholding and pay less on your withdrawals later, after you retire.

Tax Gain-Loss Harvesting

It matters when you sell investments. Tax gain-loss harvesting uses your portfolio’s losses to offset your overall capital gains. A single investor whose income is $80,000 and has $10,00 in long-term capital gains could offset long-term capital gains for a tax liability of only $1,500. 

How? The investor sells underperforming investments carrying $10,000 capital losses. The losses match the gains, resulting in a tax liability of zero. 

Alternative Minimum Tax Planning

Suppose you have enough income to hit the annual minimum tax threshold. In that case, you can develop an effective plan to generate the correct documentation to determine whether that will happen. Then you can restructure your tax profile to minimize your taxes or keep you from reaching the AMT.

Multi-State Tax Planning

If you work in one state and live in another or earn money across several states, multi-state tax planning keeps everything straight, so you don't default on any state taxes and uses state taxes to minimize your federal tax profile. 

Multi-state planning is crucial if you do business across state lines. 

Estate Planning

Nobody wants to think about dying, but the financial health of the family is a crucial issue. If you die, what taxes will the survivors pay, and who inherits your property and money? How can you maximize the funds available for your loved ones without estate taxes bleeding them dry?

Succession Planning

Owning a business is the American Dream. But who runs it when you step down or die? Do you want the family to retain ownership, or do you want a key employee to receive it? You need to develop a plan that lines up with your personal priorities. 

Non-Profit Planning

The IRS scrutinizes non-profits. Without proper planning to ensure your non-profit complies with the rules to maintain tax-exempt status, you could owe significant money.

Tax Saving Strategies

There are several avenues to take to save taxes.

  • Split the income between family members or legal entities to lower the tax bracket for each.
  • Shift income or expenses from one year to another so they can be taxed at a lower rate.
  • Defer tax liabilities through your investment choices like pension plans, contributions, and other tactics.
  • Using certain investments to produce tax-exempt income.
  • Finding tax deductions by structuring your money to pay for things you enjoy, like a vacation home.

Learn more tax tips here. 

Business tax planning

Business tax planning helps protect your family by setting up creditor payment protection in the event that your business is in debt. In the event that you are selling off a business, tax planning can make sure that you pay any tax bill associated with the sale without getting into tax debt with the IRS or having your personal assets at stake.

Estate tax planning

Estate tax planning is designed to lighten the financial burden that your loved ones may have to deal with when you are gone. Tax professionals can show you how to gift money or items to your family on a yearly basis before you're gone, in a way that avoid tax as much as possible. That way, your loved ones are left what you intended to give them, without a heavy tax burden to worry about. Tax professionals are even skilled in dealing with life insurance policies, and making sure that the proceeds are distributed as you wish.

If you need customized tax planning for your personal taxes, business, or for estate planning purposes, you need the help of a professional tax firm. The team at Top Tax Defenders knows how the IRS works, and how your business or estate will be taxed. The experienced firm can help you avoid a tax burden by planning today, rather than waiting until it's too late. Top Tax Defenders boasts over 27 years of experience helping clients with tax issues.

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