Why is Tax Planning more Critical now than Ever?
Tax planning takes steps to minimize tax liabilities to ensure all available allowances, deductions, exclusions, and exemptions are working together in a tax efficient manner, which in return will project the total income taxes paid by the client. Tax planning helps clients avoid any surprises before tax season comes. P+G advisors come up with a strategy to help their clients pay less taxes overall, while also making sure they are following all the current tax laws. Planning also helps clients maximize their tax benefits when their tax strategy is developed ahead of time. Changes is marital status, dependents, employment and other outside factors can all effect your tax planning. Tax laws that are currently in flux and changing can lead to different tax situations, so time is your friend when it comes to tax planning. Your trusted tax advisor, at P+G, is the best resource as they stay up to date and educated about the fluctuating tax laws. Tax planning and tax preparation are two completely different things. Tax preparation is preparing and filing your tax return to the IRS. Tax planning helps ensure that you are paying your responsible share of taxes, no more, no less. Advanced tax planning allows time to break down past tax returns in order to find opportunities to lower the amount of taxes owed in the future. Efficient tax planning helps individual and businesses achieve their financial goals, which helps them plan for upcoming needs.
Many invest and save to preserve their wealth and generate growth on their money. Tax planning plays an important role when you invest money to protect your money and make the most of what you worked so hard for. P+G advisors will come up with the most tax efficient strategy to help you hold on to your capital and assets.
Tax Planning for your Business
Income tax planning has been even more important over these crazy pandemic tax years. This year the government stepped in to offer economic relief for many businesses as a result of the impact Covis-19 as had on our economy and businesses received relief in the form of PPP loans, EIDL Advances, and ERC tax credits. In our August Blog we discussed the PPP and ERC tax credits that have been given out this tax year, please visit our Blog to see more on these forms of relief. Some are taxable, some are not, and it can be confusing! This is why it is very important for business owners to make sure their financial reports, and books are up to date and in good order. Business Owners should meet with their and contact their P+G advisors to see how these economic reliefs and any other business changes will have any impact on taxable income. Do not make the mistake of thinking tax planning is not important. Being in the middle of a global crisis, is making tax planning critical for business owners. This will help you make sure you are planning correctly for your year-end taxes records.
Tax Planning for Individuals
Tax Planning is one of the most important aspects when is comes to financial planning. It is smart to have your Tax advisor analyze your financial situation from a tax efficient point of view, and advise you what investments and other resources you can utilize optimally. They will work with you to reduce your tax liability by the way of exemptions, deductions, and benefits. Have you recently
Tax planning is very important is if you had any changes since you last filed last year’s tax return. Some changes to make sure you make your CPA aware of are:
• Have you changed jobs?
• Do you have an increase or decrease in your income?
• Did you sell or buy any property?
• Have you purchased rental property?
• Did you get married?
• Did you have a baby?
• Did you start a business or form an entity?
Talk to your trusted tax consultant, they can tax plan for any changes and give you an educated projection of what your 2021 tax year will look like.
I reiterate, tax planning for tax year 2021 is more important than ever. If you are having a high income year or a low income tax year, tax planning is important regardless. Make sure you keep your records up to date, to help your tax advisor analyze your income and make educated decisions and give any needed advice. Always remember your tax advisor cannot read your mind, make sure they are provided everything and are aware of everything they need to know, they are experts and there to help you.
A Message from P+G Built Solutions
We at P+G Built Solutions pride ourselves in staying educated on the most recent tax law changes and resources available to our clients. With the recent infrastructure bill and the proposed budget reconciliation plans in congress we are expecting some major tax law changes in the coming months/year. With tax law changes there comes an even greater need for tax planning, especially in years when there has been so much fluctuation in income and changes in relief and law already. If you normally have tax planning done it would be best to reach out to us early so we can get started on your planning. If you have had any major changes in the past year, new job, sold a home or business, had a major purchase, got married etc. this may be a year where you need tax planning. If you believe you need planning please reach out to us. We are always here to help.