How to Reduce Your Tax Liability

 It is already March. If you have not yet filed, chances are you are not expecting much of a refund or believe you will owe more tax. The root of your frustration is probably inadequate tax planning.
When you meet with your tax preparer, he or she should be able to spend part of your session tax planning so you can avoid paying too much next year. If your tax preparer works efficiently with you, he or she should be able to input your tax information expeditiously enough to allow time to review your situation and provide you invaluable advice. For some, tax planning may save a couple hundred dollars on next year’s taxes. In some cases, an individual’s tax liability may be reduced by thousands of dollars.
What Does Tax Planning Involve?
Tax planning makes you more aware of the short and long-term tax consequences of your past decisions, and establishes the actions to take to improve your situation. Tax planning involves determining the right timing for future purchases, selecting investments and types of retirement plans, considers how you could minimize your capital gain liability, and establishes how to give away less of your estate to the government.
Your Review
Your tax professional should review your latest tax return and financial situation. This includes your employment history, assets, equity, investments and liabilities. Your tax professional should also inspect your percentage of earnings going to federal and state taxes. Based on this review, your tax professional should be able to provide valuable advice to reduce your tax liability. Recommendations could include contributions to your investment plan, making tax-free gifts, or considering mutual funds, tax-free CDs, bonds or money market funds.
What You Should Do
Ask your tax professional to allow enough time to provide you tax planning advice during your tax meeting and, if needed, additional assistance after tax season. If yours won’t, find one who will. And if you customarily file your own return, contact tax preparers and find one who could save you money.
Through their EZ2 Thrive program, Professional Tax Services provides unlimited tax planning advice free to their clients. For more information, call 661-259-1967 or visit www.protaxservices.com.