Mar 19 2009
Planning Ahead for Better Tax Management
Many readers are trying right now to figure out how to take care of last year’s taxes. The last thing they want to do is start worrying about next year’s taxes.
Big mistake.
Tax planning should take place yearly, and needs to be broad in scope. There also needs to be a careful assessment of your financial situation in the process and goal setting that will culminate in the preservation of your wealth. Here are a few ideas of planning to keep the money you earn.
1. Look at your previous year’s taxes. What did you do right and what did you do wrong? For example, did you contribute to a retirement plan? Was it one offered at work? Were you able to at least sock away as much as the employer would match? Consider that to be free money.
2. Look at which stocks you have lost terribly on this year. You might want to wash them out of your portfolio by selling and getting leftover money into the market whenever you feel ready to deal with the risk. That way, you have the tax benefit and the time to recover.
3. Consider using real estate to use depreciation to reduce your ovrall taxes You need to have a willingness to work with commercial or rental property, so be sure it is something you can handle.
4. Would having a side or home based business give you deductions that you can write off? Using a these businesses for tax benefits is something that your accountant can help you with. If you can handle an additional side business, they can prove to be quite lucrative.
5. Plan to make home improvements based upon tax breaks that compliment the needs of the house. There again, work with your CPA to find the best deductions before you spend a lot of money. Especially be mindful of “green” improvements .
Taking the time now to make wise tax decisions is the way in which wealthy people keep their money. Remember, you can always “pay your fair share” by contributing to the charity of your choice. That way you will have a little more say in how your tax money is spent.
