Tax Planning Strategies – Increase Your Income with Systematic Tax Management
Taxes being the primary source of income to the government to undertake the public services, it is important to pay taxes, at the same time, follow certain aspects to help you with making tax exemptions.
PHOTO BY FLICKR.COM/THETRUTHABOUT/
Tax Planning Strategies - Plan of Action for the Tax Payers
While around 25% of the income goes as income tax, it is highly essential to choose certain tax planning strategies that help you with saving taxes and reduce further complications. Buying investments with a positive cash flow is one of the best tax planning strategies
. This will help reduce your tax liabilities near to zero.Before making tax planning, it is essential to understand how the tax brackets work. If an individual’s salary is between 0 and $16,750, the taxable income is taxed at 10%. Between $16,750 and $68,000, the taxable income is at 15%, and the taxable income between $68,000 and $137,300 is at 25%. By moving the income to the lower bracket, the tax rates can be further reduced. Increasing retirement plan contributions is one best way to switch the income to a lower bracket, and hence it is one of the best tax planning strategies. In addition, tax credits can help reduce the taxes. Illegal tax avoidance is a crime, and failing to pay taxes might land you up in jail.
Income Tax Planning - Investments Reduce Taxable Income
Before doing income tax planning, you must know at least the basics of income tax and the rules involved in filing the income tax returns. While internet is a great source to get self learning tips on tax payments and benefits, you can also refer certain books and guides that make income tax filing at ease. To do proper income tax planning
, you must have a record of your income, investments, and insurance policies for making things simpler while filing the tax. Those paying home mortgages have great benefits, as the tax rates paid by them are extensively lessened. Paying the income tax on time reduces further complications and actions from the Internal Revenue Service and the Federal Government. Investing wisely, like allocating your savings on mutual funds, stocks, fixed deposits and insurance policies will help you save taxes.
Corporate Tax Planning - for Business Level Planning
With the basic concept of minimizing taxes in mind, corporate tax planning involves retirement, medical, travel and other benefits to the employees. There are retirement, cafeteria and medical benefit plans. The cost involved in starting a company can be written off from getting taxed. In addition, business travel expenses, first year purchase of machinery, storage facilities, fixtures and personal properties can also be exempted from taxes. In short, these expenses have to be legitimate business expenses in order to get tax exemptions. A corporate planning attorney can help in structuring the company to be a successful venture, and complying with the tax considerations and rules at the same time. Contributions to charitable organizations are also great ways to consider in corporate tax planning.Photo Source : flickr.com/thetruthabout/