Tax planning is an integral piece of a proper financial plan. The fact is many people do not do any tax planning. I have seen this truth in my practice through new clients who often tell me, “My tax guy never talked to me about how to lower my tax bill through tax planning.” Most folks handle their taxes in a reactive manner versus a proactive approach. They dump their tax documents on the CPA’s desk and hope for the best. This is a recipe for disaster.
Now that tax season is over it’s time to start planning for your 2009 tax year, especially if you are self employed. There is plenty of time to make adjustments that will work in your favor to swing the tax momentum to your side. There are new laws in place, many of which are quite complicated, that will work for you, but you must implement them in 2009. This illustrates the importance of proactive tax planning.
Getting control of your taxes and saving tax dollars is what tax planning is all about.
Some of the biggest savings associated with tax planning can come from ideas that are very simple, such as saving a percentage of your income to cover estimated taxes or retirement contributions (if you are self employed), or increasing your 401K/403B contribution while adjusting your W-4 so your paycheck is not affected (for those who are employees).
Like many other aspects of your financial life, through knowledge and understanding can come clarity. Take control of your taxes. Remember that taxes are the single largest recurring expense that we will have throughout our lifetime. The tax code is quite complicated, so talk with your Financial Advisor or CPA about helping you plan accordingly for your 2009 tax year.
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