The tax code and the myriad of laws that affect it are changing constantly. In fact, many of the most common tax planning techniques from even five years ago have gone away with recent changes. Of course, with every door closed, a window opens, and there are still plenty of effective strategies available to significantly reduce your tax liability.
The essence of tax planning is determining what financial options you can take advantage of in order to reduce your tax burden or defer it to future years. There are many such options; the goal is to match your circumstances with the most effective vehicles to give you tax liability savings.
Here are some examples of common tax planning strategies:
- • Estate tax planning often operates through options such as trusts, gifting, and wills. The two critical goals of estate tax planning are avoiding probate court, (which is costly and unnecessary), and planning ahead to maximize the amount of your estate that moves on to the next generation without being taxed. By putting money into trusts, giving money to your descendants (within the legal giving limits each year), and assigning everything clearly in your last will and testament, even very wealthy families are able to move their fortunes onto the next generation with little (if any) tax liability.
- • Gift tax planning is a common type of estate planning. The purpose of the gift tax is to prevent families from circumventing the estate tax by simply giving everything they own to family or friends before they pass away. There are ample exceptions, however, that you can take advantage of, from giving away up to the annual legal limit of ‘normal’ gifts to giving gifts that are always tax-free, such as paying for someone’s medical or educational expenses.
- • Business tax planning works largely through finding, planning for, and taking advantage of various write-offs. For example, one write-off for small businesses that is available in 2013 is for depreciation on old equipment and purchases of new equipment that is vital for your business operations. In general, the goal of business tax planning is to minimize reported income, maximize reported expenses, and seek every write-off you can legally qualify for.
Tax Consulting Services
Patterson & Associates offers our services to any private entity — individual, business, non-profit, or otherwise — in the form of strategic consulting. We offer the first hour of any such consulting free of charge, so you can gain an in-depth understanding of what we have to offer and whether or not our services are right for you.
There are literally thousands of different tax strategies available. As tax advisors, Patterson & Associates helps evaluate our clients specific financial situation to create effective tax strategies. Call us today and learn how our tax advisors can help you.