One of the most advantageous things about working with an accountant is the ability to plan for the future. With our tax planning services, we make sure you’re never caught off guard by an unexpected tax bill. Instead, we make sure you pay only the amount of tax necessary, and we’ll calculate estimated taxes so you can make payments throughout the year instead of one large sum at tax time.
This means being more aware of your tax situation and keeping more money in your pocket. Read on to learn more about how our tax planning services can help you save money.
What are tax planning services?
Tax planning services help make you more aware of your tax situation. The ultimate goal of tax planning is managing your tax situation in order to minimize the tax you pay. This can be done in a variety of ways depending on the accountant you hire.
One method of managing tax through tax planning services is by running various scenarios. This can be done for both personal and corporate tax situations. Based on your previous year’s tax situation, and any changes during the current year, your accountant will estimate your tax owing depending on the various credits and deductions available to you.
For example, if you’re unsure whether you should be paying yourself a wage from your company, your accountant can calculate comparison scenarios for you that will determine how this decision will impact both your business and your personal tax returns.
How is tax planning different from compliance?
Tax compliance simply means filing your taxes in accordance with the law. So, for personal taxes, this would mean making sure you comply with the requirement to file your taxes by April 15th or file a request for an extension. Tax compliance doesn’t take into account all the options available to you. It’s not up to the IRS to make sure you’ve claimed all the possible credits and deductions that are available to you and your business. That’s up to you and your accountant.
This is where tax planning comes in. It’s a detailed analysis of your tax situation and the deductions and credits available to you and your business based on your situation. Almost every time something major happens in your life, your tax situation changes. This is the same if you run a business.
A major problem with DIY tax software is that even though most of them have what they call an “interview” function where they ask a lot of questions about your tax situation if you don’t know all the tax laws, you don’t have the ability to try out different scenarios to see which one is the best for you.
For example, you can get a tax credit for courses taken at approved institutions, but if the course is related to skills you need to operate your business, this would also be considered a business expense. You can claim one or the other, but not both. How do you know which option is the most advantageous for your situation? Tax planning will tell you.
How can tax planning save you money?
Money saved is a direct result of the tax reduction that happens when you take advantage of tax planning services. If you only see your accountant once a year during tax season, you are missing out on potential money-saving opportunities.
In addition to certain criteria that must be met in order to take advantage of them, many government incentives also come with deadlines. If you miss the deadline, you miss out on tax savings that could mean more money in your pocket.
For example, the Tax Cuts and Jobs Act introduced the ability to defer capital gains if funds are invested in a Qualified Opportunity Fund (QOF). Gains can only be deferred if taxpayer funds are invested in a QOF within 180 days from the date they sold their investment. This could mean paying tax now as a result of the sale versus paying the tax down the road when it may be more feasible for the taxpayer to do so.
Who can benefit from tax planning services?
Everyone can benefit from tax planning services, but the more complicated your tax situation is, the more opportunity it is for you to benefit from tax planning. If you are a business owner, there may be more opportunities for tax planning than if you are an employee, but as an employee, you can still benefit from tax planning.
If you own a business, there are different tax planning opportunities available to you depending on how your business is structured. A sole proprietor is somewhat limited in what they can do compared to a corporation, but that doesn’t mean they shouldn’t discuss tax planning opportunities with their accountant.
HIgh net worth individuals can benefit from tax planning by timing the sale of their investments to minimize tax liabilities from capital gains. Charitable donations and gifts to family members also provide tax planning opportunities when it comes to the timing of these transactions.
Individuals nearing the end of their life may want to consider estate planning, a specialized area of tax planning. There are a number of ways to minimize estate tax, so you can pass on more money to your family in the event of your death.
Tax planning services offered by Levy Lauter, LLP
At Levy Lauter, LLP, we believe tax planning services go hand in hand with tax compliance. Why not file your tax return while saving the most tax possible? That’s the advantage of tax planning alongside compliance.
We offer tax planning services at both the corporate and personal level because when you own a business, personal and corporate taxes aren’t exclusive. One will affect the other. If you’d like to find out what tax planning opportunities are available to you, complete this form to schedule a complimentary call today.