Many taxpayers consider filing their returns a periodic chore that they have little or no control over. They simply fill out the form, deduct a few basic expenses, and cut a check for the amount due. They are discouraged to see such a large amount lost to taxes, but they assume their tax preparer or do-it-yourself tax preparation software has gotten them the best deal possible. Unfortunately, that’s rarely the case.
The truth is, basic tax preparation software and traditional tax preparation professionals simply can’t deliver the sort of tax savings necessary to grow your wealth. They are operating on a reactive basis, not a proactive one. Meaningful tax minimization requires a comprehensive strategy that coordinates all of your financial activities towards a singular goal: lowering taxes.
Such plans take time and commitment, as well as a bit of out-of-the-box thinking. But, the payoff is worthwhile. A substantial reduction in tax liability means more opportunity to build your wealth.
Partner with Professionals
The US tax code has always been considered one of the most complex areas of law. Despite efforts to simplify and streamline through passage of the Tax Cuts and Jobs Act of 2017 (TCJA), understanding, interpreting, and applying tax regulation remains challenging. As each element of the Act is tested by taxpayers through the court system, there is new guidance on which tax minimization techniques are permitted, and which step over the line.
Staying on top of a constantly evolving tax code is a full-time job. That makes becoming your own tax expert impractical. Instead, consider building out an advisory team to create a comprehensive financial plan, and include an expert Certified Tax Coach in the mix.
Create a Complete Tax Minimization Plan
Once you have selected your advisory team, don’t settle for a fragmented approach to tax minimization. Instead, pull all facets of your financial life together to create an all-inclusive strategy for building your wealth.
On the business side, consider issues like how your business is structured, who you employ, and which benefits will keep your tax expense low. Rethink your approach to business-related expenses and ensure you always have an eye on depreciation and other methods of deducting from your taxable income.
On the personal side, take a closer look at your assets, and focus on how and when you invest. There may be opportunities to reduce capital gains taxes or increase tax savings by leveraging tax-advantaged retirement and education savings programs.
The key is to coordinate all of these elements into a harmonized whole. When all of the puzzle pieces fit together properly, you can count on the lowest possible tax bill. Lower taxes leave you with greater investing power, and in turn, permits you to build your wealth more quickly.
Get the details on minimizing your taxes and maximizing your wealth by working with a Certified Tax Coach.