Credits and deductions can shave hundreds or even thousands of dollars off your tax bill, leaving you more to invest in your future. Strategically planning your finances years in advance allows you to take advantage of beneficial provisions in the code by timing purchases, transferring credits, and maximizing the efficiency of your finances. While the strategies they use might differ, both business owners and investors can benefit from comprehensive, long-term tax planning.

A Quick Guide to Tax Planning

What Is Tax Planning?

Taxpayers who work for a single employer and take the standard deduction don’t really need a long-term plan. However, if you itemize your deductions or run a business, deciding in advance when to make capital investments, write off a loss, or sell assets will reduce the amount you owe and help your long-term growth.

Tax Planning for Business Owners

Section 179 of the tax code allows small business owners to deduct the full value of some capital assets the year they are purchased. This deduction can slash your company’s taxes, and may even eliminate your obligation entirely. If you expect to generate more revenue next year, waiting to make these investments can offset the higher taxes you would otherwise pay. In some cases, you may be allowed to carry the value of those deductions forward and apply them to your future tax burdens.

Tax Planning for Individual Investors

Individuals taxpayers who itemize deductions can reduce their liability and increase their long-term wealth by gains with losses and maximizing deductions. For instance, earning much more than usual also means paying more taxes. In this case, selling off depreciated assets, making sizable charitable donations, or divesting your portfolio of low-performing stocks create losses that may be deductible.

The tax code is always changing, which can make planning for the future difficult. For over 15 years, the tax planning professionals at Wilson, Rea, Beckel & Associates CPAs LLC have helped business owners and individuals throughout the Pagosa Springs, CO, area minimize their tax obligations and keep as much of their own money as possible. Visit their website for an overview of their tax services, follow their Facebook for more financial tips, or call (970) 731-1040 now to get started on your tax plan today.