The financial decision you make can cause tax implications for your business, investments, and yourself. To make sure you don’t have any unexpected implications there are five methods of tax planning you can do.
The first type of tax planning is income tax planning. If you earn an income you will want to reduce the deferred amount that you owe on your income taxes. You will want to focus on your deferrals, deductions, investments, and year-end planning.
Another method of tax planning is investment tax planning. If you have an investment you will want to make sure you are reducing your tax payments. Make sure you plan year-round and have a good understanding of tax implications on your investments.
Gift tax planning is another method of tax planning if you plan on giving any gifts with monetary value. You may owe money on these gifts and it is important to know ways to minimize any taxes.
If you own a business then you will want to consider business tax planning. There are many decisions that you make that can have tax implications. These decisions can also impact your tax liability so be careful about how you pay yourself and other decisions.
The last tax planning to ensure is life event tax planning. Live events like college, marriage, and retirement can impact your taxes. Plan for these events so you make the best financial decisions.