Table of Contents
One approach to advanced tax planning is to hone in on a single issue you have in mind regarding your individual or company’s finances.
Do you see a gaping hole anywhere in the way things are getting done?
Decide what you want out of the professionals. Maybe you want to give your tax return a second glance. Maybe you want to explore your ship for leaks, i.e. your business. Or, maybe you just want to gain some insight on a decision in your personal or business finances or taxes.
Whatever it is, your tax planner will guide you step-by-step through the process of examining your issues to find the best available corresponding tax strategies and you may just end up saving more than you paid for consulting in the first place.
It’s Never Too Early For A Simple Consultation
On the other hand, if you don’t have anything specific in mind that needs help, it may still pay to have a full consultation from an advanced tax planner.
Again, whether business or personal, they will compile your tax history; tracking data from your old tax returns and income statements to better evaluate your current standing. Since advanced tax planners know everything about tax codes, they’ll easily be able to see what deductions and credits you might qualify for.
They will also have an idea of what tax strategies you might want to implement to continue experiencing reduced exposure to over-taxation and related liabilities. On top of that, they are an excellent resource for risk mitigation overall, or even to tighten your books to improve more than just tax-efficiency.
Choosing Itemized Or Standard Deductions
A basic problem many entities must confer with is whether to take an itemized or standard deduction on their tax returns. Visit https://www.investopedia.com/articles/taxes/08/itemized-deductions-overview.asp if you do not know the difference between the two.
Taking the standard deduction can often be the easy way out when it comes to lowering your taxable income, and since the TJCA Act of 2018, it’s often the option that will save you the most money. Yet itemizing may still be the best or even the only option, but it takes much more sorting through paperwork and tedious calculations.
Any tax professional can assist you with the difficult tax preparation, but a tax planner will also establish for the future which deductions you should take with regard to changes in tax laws, preemptively saving you the extra time and anxiety.
Section 1202 Tax-Breaks
If you own a whole or part of a business or common stock in certain companies, you might be eligible for tax-breaks on capital gains. This is according to the section 1202 articles; a list of conditions defining which business entities offers this exemption.
This is just one of many sets of tax codes mastered by advanced tax planning professionals. You don’t want to the one accidentally responsible for overpaying capital gains tax when you could have dropped those fees altogether but a tax planner will recognize immediately which equities of yours qualify for which deductions, or in this case, a complete break.
Tax Credits For Chronic Innovators
Are you an independent researcher or an inventor? Does your business, if you have one, participate in some kind of innovation?
Most people might be unaware that hard science and technology development are not the only endeavors that meet the conditions for tax credit. For example, if you are an anthropologist or an environmentalist contributing to the betterment of humanity and its progress, you may qualify for R&D tax credit.
Advanced tax planners will have keen knowledge on if you do or not. You may even be claiming less in R&D credits than you actually are eligible for.
Captive Insurance: A Moneymaking Feedback Loop
This is probably my favorite application of advanced tax-planning, as it demonstrates its cross-disciplinary potential: If your company experiences risks in doing business that are hard to nail down an insurance policy for, your tax planner can walk you through the steps necessary to found and operate a captive insurance company.
You as the insured can therefore mitigate risk while controlling your own insurance, all while profiting off of the underwriting. This extension of your operations also acts as a tax structure if your business is small enough, and if you meet certain requirements, the premiums paid year-round to your insurance company become tax-deductible.
Click here to find out how this compares to an actual tax shelter. Any advanced tax planner will give you access to the legal or actuarial expertise you need to help you meet those requirements, thereby maximizing the full potential of captive insurance.