Missed Opportunities to Save Money on Taxes
I decided to upgrade my wardrobe after I heard someone speak about what you wear portrays your professional image. Not that I needed an excuse to go shopping for clothes, I set out to find the best deals in high end business attire. It took a lot of time for me to peruse the different clothing sites to find the best deal. Nordstrom had its annual Anniversary Sale. Tory Burch was having a sale. Not to mention Ted Baker had some great finds. I think I spent weeks just comparing and searching to find some outfits I truly liked that would not break the bank. Ironically, when I speak to my friends, they do the exact same thing. Why else would Nordstrom Rack be so popular? Yet when it comes to tax planning and tax strategies, taxpayers are spending little to zero time doing this. Tax planning on a quarterly basis can save taxpayers thousands if not tens of thousands in tax savings. However, we will spend weeks trying to save a few hundred dollars on our clothes. Why is that?
I believe the main reason people don’t tax plan or tax strategize is because they don’t know where to begin. The tax code is daunting! Even more so now that we have a new president in office and know there will be changes to the tax code again. So, where do you begin? The following are some ideas of common strategies missed that I have seen in my practice:
- Choosing the right structure for your business.
- Hiring your children.
- Charitable Planning
- Accountable Plans
- Retirement Planning
I remember a general contractor that came into my office. He was paying on average $40K a year in taxes. We devised a plan for him, using some of the items listed above as well as some other strategies, and the first year we implemented those strategies he saved over $30K in taxes and ongoing. The last 3 years I have been preparing his returns, that savings is over $90K.
Tax planning and tax strategies are unique. Not one plan fits all. Make sure that you consult with a tax professional who specializes in tax planning and tax strategies. The time spent consulting and implementing the plan will be the most cost beneficial time ever spent!