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Understanding the Essentials of Personal Tax Planning
The critical nature of Personal Tax Planning in safeguarding financial stability cannot be overemphasized. At the heart of robust financial planning and management, Personal Tax Planning ensures not only a proactive approach to maximizing tax benefits but also plays a vital role in mitigating potential liabilities. As experts in the field of Personal Tax Planning, at DeFreitas & Minsky LLP, we take great pride in ensuring that our clients are well-equipped to navigate the tangled web of individual tax planning.
At DeFreitas & Minsky LLP, we strongly believe that Personal Tax Planning is not a one-time event but a continual process that should be undertaken all year round. In the quest to provide relevant and impactful information, we wish to virtually dismantle the mundanity surrounding tax planning and offer substantial insight that goes beyond the surface.
How Personal Tax Planning Can Catalyze Your Economic Growth
The efficacy of Personal Tax Planning lies in the tax savings that it potentially offers. By strategically arranging your financial affairs, you can significantly reduce the amount of tax that you pay. A study by the Federal Reserve Survey of Consumer Finances found that the top 1% of households by wealth saved an average of 2.3% to 3.5% of income due to tax planning.
Key elements differentiating personal income tax planning efficacy include:
- Understanding the components of taxable income
- Knowledge about tax credits and deductions
- Awareness of taxable events and tax triggers
- Familiarity with tax-saving investment plans
Components of Builder (CI)
Every professional and citizen should ideally be aware of the intricate details behind the concepts of taxable income, adjusted gross income (AGI), and modified adjusted gross income (MAGI). It is crucial to understand how these metrics are calculated and how different life scenarios affect these calculations. The CIA’s World Factbook states that income tax contributes to more than 50% of the total tax revenue for the US government. It’s wise for taxpayers to comprehend how income from different sources is treated distinctly and added in the calculation of total income.
Maximizing Tax Credits and Deductions
The IRS Tax Data Book 2020 registered over 163,775,000 individual income tax returns for the fiscal year of 2018, with 68% of these returns having claimed a standard deduction. The questions arise: What determines the standard deduction amount and can one legally avail more deductions to reduce their taxable income? Our role as tax-planning experts revolves around educating individuals about the plethora of deductions available to them—including those for education, health care, and home improvements—and how to make the best use of them.
Recognizing Tax Triggers and Managing Tax-Liability Events
A pivotal aspect of personal tax planning lies in being aware of the different taxable events and the potential tax triggers. The IRS reported that in 2019, 170 million tax returns were filed, nearly 1.9 million more than in 2018. The increase indicates the growing awareness among taxpayers to proactively file returns instead of waiting for the IRS to nudge them. Regardless, only actively managing such proceedings can lend itself to efficient financial planning.
Securing Future with Tax-Saving Investment Plans
Finally, making judicious use of tax-saving investments can significantly aid in Personal Tax Planning. The Employee Benefits Research Institute (ERBI) in Washington, D.C reported that as of 2018, retirement assets made up 34% of all household financial assets in the US, showcasing the strides that Americans are taking to secure their futures. But are they leveraging the tax benefits that come with such investments?
Dedicated Personal Tax Consultation
DeFreitas & Minsky being a renowned and well-established name in the world of Certified Public Accountants in NY, takes immense pride in holding the reign of efficient personal tax planning in assisting our clients to attain financial stability and security. We aim to go beyond traditional practices, using our experience to bring lesser-known tax planning strategies to light.
Our dedication and perseverance in creating tailored Personal Tax Planning strategies are designed entirely to cater to the unique needs of our clients. This commitment, paired with our expertise in the domain, ensures a seamless and beneficial tax planning experience for our clients every year.
Take The Helm of Your Financial Future
Personal Tax Planning may seem like a cryptic concept, but with the right advisor and a proactive approach, one can master this skill, benefitting not just yourself but your heirs. Remember, the key to successful tax planning is to understand clearly, act intelligently, and plan strategically. Let DeFreitas & Minsky LLP guide you down the path of economic fulfillment, helping you take charge of your financial future.
