By seeking customized tax planning, you can make sure that when tax time rolls around you have a plan 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 prepare 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.
Tax planning is a proactive approach to your tax profile instead of getting sticker shock at tax prep time.
With customized tax planning, tax professionals analyze 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.
Tax planning looks at multiple factors to determine your best way forward, including:
With these elements in mind, your customized tax plan can take shape. Your plan 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 include strategies for you to take advantage of relevant and allowable tax deductions, tax credits, and tax loopholes, based on your personal situation. For example:
You can take many steps to plan for your taxes, but some situations are more complicated and better suited to support from a tax professional. If you need help with your taxes, Top Tax Defenders can help you with all aspects of tax planning. We handle personal, business, and estate planning. Top Tax Defenders' team of tax professionals can provide your with expert guidance based on your specific situation and customized tax planning services to help you reduce the taxes you pay and increase the cash you (and your family) can keep.
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.
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.
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.
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.
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Implementing tax planning strategies can help you get these benefits and more. Here are some examples of common tax planning strategies that may be utilized in your personalized plan:
Save money in pretax withholding and pay less on your withdrawals later, after you retire. Contributing to tax-advantaged retirement accounts, like a Traditional IRA or 401(k), can reduce taxable income and defer taxes on growth until withdrawal.
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.
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.
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.
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? Utilizing trusts, gifts, and other estate planning instruments can minimize the tax impact on your heirs and ensure a smooth transfer of assets. Tax professionals can also help make sure proceeds from life insurance policies are distributed as you wish.
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.
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.
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.
In addition to the strategies listed above, you can also take advantage of other traditional tax saving strategies like these:
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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. We 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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Customized tax planning is a proactive, ongoing strategy to legally reduce the amount of tax you owe, for individuals, businesses, and estates. A tax professional analyzes your finances, family structure, income, investments, and future obligations to build a plan that minimizes your tax liability throughout the year, not just at filing time.
Tax preparation is the process of filing your return accurately after the year ends. Tax planning happens before and throughout the year. It identifies strategies to reduce what you owe before the bill arrives. Preparation tells you what you owe; planning changes what you owe. Done correctly, tax planning makes tax preparation less stressful and less expensive.
A customized tax plan considers your income, expenses, investments, family structure, business structure, financial obligations, expected future income, and any major planned purchases or sales such as real estate. It uses these factors to time transactions strategically, change the character of income, and create circumstances that defer or eliminate taxation within the bounds of the law.
Common strategies include contributing to pretax retirement accounts like a 401(k) or Traditional IRA to defer income, tax gain-loss harvesting to offset capital gains with investment losses, bundling medical and charitable expenses to maximize deductions, timing capital expenditures for maximum tax benefit, and income splitting among family members or legal entities to reduce each party's tax bracket.
Tax gain-loss harvesting is a strategy that uses investment losses to offset capital gains, reducing your overall tax liability. For example, if you have $10,000 in capital gains, selling underperforming investments with $10,000 in losses cancels out the gains entirely, bringing your capital gains tax liability to zero. Timing these transactions within the same tax year is critical.
Contributing to pretax retirement accounts, such as a 401(k) or Traditional IRA, reduces your taxable income in the year of contribution. When you take distributions in retirement, you are likely in a lower tax bracket, so you pay less tax on those funds. The compounding effect of deferring taxes over a working lifetime can result in significant savings.
Estate tax planning uses tools such as trusts, gifts, and other instruments to minimize the tax burden on your heirs when assets are transferred after death. Without proper planning, estate taxes can significantly reduce what your family receives. A tax professional can structure your estate to maximize what passes to your loved ones and ensure assets are distributed according to your wishes.
Multi-state tax planning manages your tax obligations across multiple states, which is relevant if you live in one state and work in another, own property in multiple states, or run a business across state lines. It ensures you meet each state's filing requirements, avoids double taxation where possible, and uses state tax liabilities strategically to minimize your overall federal tax profile.
The Alternative Minimum Tax (AMT) is a parallel tax calculation that kicks in above a certain income threshold, preventing high earners from eliminating their tax liability through deductions. AMT planning involves analyzing your income and deductions to determine whether you are at risk of triggering the AMT, then restructuring your tax profile to minimize exposure before the end of the tax year.
Yes. Business tax planning identifies the most tax-efficient structure for your operations, times capital expenditures for maximum deductions, sets up creditor payment protections, and plans for ownership transitions such as succession or sale. It also ensures that if you sell your business, the tax liability from the sale is managed without putting your personal assets at risk.
The best time is as early in the tax year as possible, ideally at the start of the year or immediately after a major life or financial event such as starting a business, getting married, buying property, or receiving a significant income increase. Many tax-saving strategies must be implemented before December 31 to apply to that tax year. Waiting until filing season eliminates most planning options.
Simple situations, such as standard deductions, single income source, no significant assets, can often be managed independently. However, if you have a business, investments, real estate, multiple income sources, or an estate to plan, a professional tax planner will identify strategies you are likely to miss and ensure your plan remains current as tax law changes. The savings typically outweigh the cost of professional guidance.
