Tax planning: Now more important than ever

Taxes 101: Prepare for Tax Day with year-end tax reduction techniques and tax planningThankfully, it’s not too late to try and minimize your taxes for 2023. If you haven’t scheduled a tax planning session, now is a great time to do so. Here’s how a tax planning session can potentially help your situation.

Tax planning

It can make a difference. This is especially true if a significant event occurs during the year. For example:

  • Even in uneventful years, external forces like new tax laws can be managed if planned for in advance.
  • Are you selling a house? You can avoid taxes if your primary residence requirements are met.
  • Starting a business? Choosing the correct entity can lower your taxes every year!
  • Getting ready to retire? Properly balancing the different revenue streams (part-time wages, Social Security benefits, IRA distributions, and more) significantly impacts your tax liability.

Preparation is key

Put yourself in control. Timing is essential when minimizing taxes, and the timing is often in your control. For instance, bundling multiple years of charitable contributions into one year can create an opportunity to itemize deductions. Plus, holding investments for longer than one year to get a lower tax rate and making efficient retirement withdrawals are other examples of prudent tax strategies you control.

Tax planning opportunities exist for every income level, not just those at the top of the tax bracket. Tax deductions are available for student loan interest, IRA contributions, and other situations, even if you claim the standard deduction. Certain tax credits (refundable credits) will increase your refund even if you don’t owe taxes. Missing any of these tax breaks can unnecessarily increase your taxes.

The tax landscape is constantly changing. New tax laws are passed almost every year. Recent laws may mean new tax deductions you can take advantage of. It can also mean that an existing deduction you used to take is no longer available. A tax planning session can help you understand what deductions are and are not available for your situation.

You have help. Tax planning involves looking for ways to reduce taxable income, delay a tax bill, increase tax deductions, and take advantage of all available tax credits. The best place to start is to bolster your level of tax knowledge by picking up the phone and asking for assistance. Contact our RRBB advisors for more information or if you have questions.


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