Tax Strategies
The filing statuses are single, head of household, married and joint, and married but separate.
Items to consider:
Filing Status - Determining which filing status you qualify for and then which one is best for you is an important factor. The filing status's are; single, head of household, married and joint, or married but separate. Each have their advantage in specific situations.
Itemized Deductions - You can deduct your medical exoenses, taxes, inters, charities, and job related expenses as "itemized deductions." It may be to your advantage to "tax plan" with these items by shifting them from one year to another tax year.
Marginal Rates - At certain levels of taxable income, the tax rates increase. This is commonly referred to as tax brackets. It could be to your advantage to shift income or expenses from one year to another to keep yourself in a lower tax bracket.
Investment Strategy - There are times when you may want to buy or sell investments to take advantage of taxable gains or losses. Capital gain tax rates are better than ordinary income tax rates. Capital losses can be limited to $3000 per year.
Retirement Plans - Different plans allow you to save money for retirement by deferring the income tax—earn it now but pay tax on it later: IRA'S, SIMPLES'S, 401(K)'s, Roth IRA's, etc. All have a place in tax strategy.
Education Costs - There are now tax benefits available to help pay for college and these also can help your tax strategy.
Business - If you own your business, the legal form of organization can help your tax strategy. A partnership versus a corporation, a C-corporation versus an S-corporation, an S-corporation versus a limited liability company, or a limited liability company versus a partnership—all affect tax strategy.
Home Office - More and more people are working out of their homes, which can effect tax strategy.
To keep your income tax at a minimum, it takes good tax planning. If you would like us to help with your tax strategy, please call us at 641-628-3737, or e-mail us at info@vanmaanencpa.com.
Disclaimer: These tips and strategies are for general information purposes only, and are not intended to provide professional tax advice. To determine how this or any other tax tips listed herein might apply to your specific tax situation, contact our office for more details and counsel.
Van Maanen, Sietstra & Meyer, PC is a member of the American Institute of CPA's, the Iowa Society of CPA's, and the Private Practice Company Section.