Can Tax Planning Help Me?
Most people do tax planning without even realizing it. If you knew you would owe tax at the end of the year, and decided to just wait and pay it then, you made a tax planning decision.
But tax planning can be much more than determining when to pay a tax that is due. It can affect in what year the tax will be payable to begin with. For example, by pushing income into the next tax year, and accelerating deductions to this year, you minimize this year's tax. If you "bunch" your itemized deductions into alternate years, and take advantage of the standard deduction in the other years, you are making your actual deduction go a lot further in reducing your tax.
In many cases, you can achieve something you want to do in different ways, some of which may be tax-favored. By knowing what the tax consequences will be of each possibility, you can plan to take advantage of the better alternative. In some cases, you may have to chart the tax results for several years to make this determination.
If your tax situation is complex, a professional tax advisor can provide accurate tax projections under your various "what if" scenarios. The fee involved is often more than paid for with the tax savings realized.
