Taxes may be inevitable, but that doesn’t mean you should pay more than you actually owe. Fortunately, the code includes a variety of credits and deductions that may reduce your liability. Taking advantage of these provisions may require year-round tax planning and the help of a skilled professional. Here are a few reasons tax planning is so important.

Why You Should Start Tax Planning Today

1. Maximizing Deductions & Lowering Tax Bills

Many deductions depend on your financial situation, and losses in one area can offset gains in another. For instance, if you earned significantly more than usual in one year, a tax planning professional may recommend waiting to sell stocks or other assets until your income returns to a normal level.

2. Giving Yourself Time

By the end of the year, it’s often too late to make financial moves that could lower your tax burden. Most people should start planning in October or November, but business owners, the self-employed, and people with complex investments should begin much earlier.

3. Adjusting to Tax Code Changes

The tax code is continuously updated, with some deductions added and others eliminated every year. Tax planning well in advance allows you to protect yourself from some of these changes or take advantage of new opportunities.

4. Health Premiums May Be Tied to Taxable Income

If you don’t receive health insurance benefits from your employer, your taxable income can have a major impact on your health care expenses. If you purchased health insurance on the marketplace, reducing your taxable income as much as possible could save thousands of dollars in premiums throughout the year.

Since 1999, Tudor Wilson & Associates CPAs, LLC, has provided effective tax planning to business owners and individuals throughout the Honolulu area. No matter how simple or complex your financial situation may be, their tax professionals will provide insight to protect your wealth and future. Visit their website to learn more about their tax planning services, or call (808) 592-2000 to make an appointment.