How to avoid paying more taxes than necessary

Now that tax season is over, except for those people and companies that filed extensions, we begin preparing for the new tax year. One of the main questions we always receive is, how can I (we) avoid paying more taxes than necessary?

A lot of people think that tax “loopholes” were only made to be applied by the wealthy, but there are several ways all taxpayers can legitimately benefit from the tax laws. There are some laws that may not apply to you depending on your particular situation, but the law demands that no one is required to pay more taxes than required.

Below we share many of these underutilized tax-cutting strategies.

• You can defer tax liability by making wise investment decisions and by contributing additional money to your retirement plan.
• You can invest your money in a way to produce income that is taxed at a more favorable rate, which if done correctly, may be exempt from state or federal income taxes.
• You can shift deductions from one tax year to another year in order to get the most benefit from those deductions.
• You can shift income from one tax year to another year in order to have that income taxed at lower rates.
• You can split your income among family members or legal entities in order to get the income taxed in lower tax brackets, but with this strategy you must be aware of the “kiddie tax”.
• You can manage your estate to receive tax deductions for expenditures you pay for things you enjoy, like a vacation home.

Many of the strategies discussed above should be made in consultation with a financial advisor since expertise in these areas are needed to maximize your tax-cutting strategies. Contact Assurance Tax & Accounting Group, and let our experts give you the help you need. We are just a phone call away. Our tax and financial planning professionals are waiting to assist you in avoiding paying more taxes than are necessary.