During the month of March, many of us have turned our attention to taxes. After all, the IRS is expecting to hear from us in a matter of weeks. You may have your trusted accountant taking care of the numbers for you or you’ve gone the DIY route and you’re using TurboTax or a similar program. You or your accountant is looking back over 2015, finding every possible way to maximize your deduction to minimize your tax liability. In a nutshell, this is tax preparation.
You’re looking for deductions related to property tax or mortgage expenses. Or if you had a significant amount of medical expenses, tallying more than 10 percent of your adjusted gross income, you may have yet another potential deduction. In many ways, a bulk of tax preparation is finding these deductions, which can add up to incredible savings for the year.
On the other hand, there is tax planning. Rather than looking back at the past year, tax planning involves looking forward five, 10, or 20 years. When you plan, you consider what you can do to keep your tax burden to a minimum, while positioning some of your savings to generate a tax-free income.
For example, if you had an additional $30,000 in income every year, but that income was taxed at the federal and state combined rate of 30 percent, you would be left with only $21,000. Through careful tax planning, you could change a loss of $9,000 into a gain.
That’s where we come in. We can show you how to take that additional income from taxable to tax free. Let’s go back the example of $30,000. When that amount is tax free, you get to keep that $9,000 you would have otherwise given to the state and federal government.
Now, you can use that money however you see fit. Use the tax savings to take your kids or grandkids to Disney World. Treat you and your spouse to a dream vacation. Or, continue to save. We would rather see you get the most out of your money and enjoy the money you worked hard to earn, rather than see it lost to unnecessary taxes.
Think about the long-term tax savings. If you’re generating $30,000 in additional income, over one year you can save $9,000. Over 10 years, that’s $90,000 in tax savings! In 20 years, it’s an incredible $180,000! And this is on top of your standard income.
If you’re interested in planning your tax future and you want to know how you can save, year after year, give us call at 800-467-8152. You can set up a 15-minute strategy session with either myself or any one of our accomplished advisors. We’ll work with you to find the best solution for your tax situation, and we’ll even generate a report detailing what you can do to plan for your financial future.