Tax planning is an important part of maximizing your current after tax income as well as growing assets throughout your lifetime, for your own use as well as subsequent generations. Two important aspects of tax planning are the strategies and the timing.
Strategies include:
- Reducing taxes on your current income in order to keep more of what you make.
- Reducing taxes on your investments so your wealth grows faster.
- Shelter current income into retirement plans for those golden years.
- Reducing taxes on your estate so that your family receives more of what you saved.
- Selling assets that have grown in value in tax efficient ways.
Timing Includes:
- Deferring tax on income now to pay less tax in the future.
- Shifting income and expenses where possible to years that provide the best tax advantage.
- Determining if and when paying tax now is more beneficial than postponing payment.
