Come April every year, thousands of bloggers, tax preparers, and news reporters put out articles on tax planning. But planning ahead for taxes is a discipline that takes place all year long – whether you file quarterly or once a year.
Start your tax planning strategy with the basics. This includes using legal and ethical tactics to maximize credits and deductions to lower your final tax bill. Arizona residents would be wise to start planning now for their 2010 taxes in order to avoid surprises – and problems with the IRS.
Lower Your Gross Income
This doesn’t mean quitting your job or cutting back on hours, it merely involves excluding some income from federally taxable income. Some legal and effective ways to accomplish this are:
- Sock more money into a 401k or 401b. Retirement contributions are subtracted from your gross income for tax purposes, and you get the added bonus of saving for retirement at the same time.
- Defer income until next year. This might include not sending invoices for work completed until January 1st of the next year, or waiting to sell stock. Of course, you will still have to pay the taxes next year, so plan accordingly.
Maximize Deductions and Credits
Deductions come out of your gross income, while credits come off of your final tax bill. Make sure you get the maximum deduction or credit by:
- Checking into whether you qualify for the many available tax credits. Common credits include the child tax credit, the hope and lifetime learning credit, the child and dependent care credit, hybrid car credit, energy saving devices credit, and the making work pay credit.
- Maximizing your deductions by contributing to IRA accounts, remembering to include qualified medical expenses, taking certain homeowner deductions, and qualified business and personal expenses.
Of course, tax law can be complicated, and it is constantly changing. Always consult a tax professional when tax planning or preparing your final return.
At The Pew Law Center, PLLC, we understand that if you do run into tax problems with the IRS, it can be overwhelming. Whether you owe back taxes, haven’t filed taxes for several years, or have received an audit or wage garnishment notice from the IRS, the attorneys at The Pew Law Center, PLLC can help you or your business with these and any other federal and state tax problems.
We are a dedicated debt relief law firm. We help people from Phoenix, Mesa, Gilbert, Queen Creek, Chandler, Scottsdale, Apache Junction, Tempe and throughout Arizona work through tough tax problems or file for bankruptcy every day. We can help stop the debt cycle and give you relief from your overwhelming, burdensome, and crushing tax problems. Let our Scottsdale bankruptcy law firm help you. Please don’t wait another moment. Call us right away – our attorneys will help get you the fresh start you deserve.