MINIMIZING THE TAX BITE
October 30, 2017Share:
By: Michael White, CPA
Benjamin Franklin said there are only two things certain in life: death and taxes. Both are inevitable, but we all have the ability and perhaps duty to minimize our tax burden. Look for ways to pay the minimum required because at the end of the day it is not what you make it is what you keep that counts.
1. Keep good records. Find a system that works well for you and your tax advisor. Good records require year-round effort. No matter which method you use the goal is to track items so you don’t miss anything and to give your tax advisor a clear map of your financial activities so that together you can minimize taxes and potentially reduce tax preparation costs.
2. Conduct periodic reviews of your tax situation with your tax advisor. An hour or two during the year can go a long way helping you make decisions in your life that have tax consequences. “Dust off” last year’s return and discuss what you could have done better.
3. Don’t avoid taxes. Failure to file your taxes has potential civil and criminal implications. If you file and just can’t pay you can’t be criminally prosecuted. There are several plans that we can assist with to get you back on track.
4. Consider discussing important life decisions upfront. From home acquisition to marital status to business and investment decisions, keeping your tax advisor in the loop quite often will allow them to structure transactions with the best possible tax outcome.
5. Assume that taxes can be reduced until proven otherwise. Timely communication coupled with planning with your tax advisor can save you thousands of dollars over your lifetime.
6. Don’t overpay during the year. Do you really want to give the government an interest free loan just to say you got a hefty refund of your own money? Consider paying the required minimum and investing the rest.
7. International tax implications. More taxpayers are dealing with foreign tax issues that tend to be complex and create special tax reporting and compliance.
Yes, taxes are inevitable, but with proper planning that includes precise actions, meticulous record keeping on your part, and obtaining good professional advice, the impact can be reduced. Wilkins Miller has the resources and knowledge and is ready to help you “fulfill your duty” to reduce your tax burden.