Tax Planning in Chesterfield, MO

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Tax PlanningReduce Your Tax Liability With Correct Capital's Financial Advisors in Chesterfield, MO

Tax Planning in Chesterfield, MO. Tax liability is how much you owe in taxes to local, state, and federal authorities. Even though Uncle Sam will always collect some portion of your earnings or profits, The IRS allows for several ways to reduce how much money you have to pay. Tax planning is also essential for successful retirement planning. At Correct Capital, we partner with local Chesterfield, MO individuals, families, and businesses to find creative and proven ways to reduce their tax burden. Speak to Correct Capital's financial planners and fiduciary advisors today at 877-930-4015, reach out online, or read on to learn how judicious tax planning can benefit you.


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Tax Planning for Chesterfield, MO Individuals and Families

Prudent tax planning can help individuals and families put more in their retirement accounts and have extra money for the short-term. Ways to reduce how much you owe when tax planning in Chesterfield, MO are:

  • Standard Deduction vs. Itemizing —

    The standard deduction is specific dollar figure that you can deduct from your taxable income. In 2022 and 2023, that flat-rate is:

    2022

    • $12,950 for single filers
    • $25,900 for married, filing jointly
    • $12,950 for married, filing separately
    • $19,400 for head of household

    2023

    • $13,850 for single filers
    • $27, 700 for married, filing jointly
    • $13,850 for married, filing separately
    • $20,800 for head of household

    If your deductible income is more than the above, you can itemize your return. The downside is that filing will be more complicated, and you will have to document why you are eligible for the deduction when you send your returns.

  • Review Your Retirement Accounts —

    Roth IRAs and Traditional IRAs both offer tax benefits in different ways. Contributions to a traditional IRA may be fully or partially deductible, and the money is not taxed until you withdraw it. Money put into a Roth IRA do not affect your taxable income, but the money grows tax free. Your unique situation will determine whether a Traditional or Roth IRA is preferable for your tax planning. For instance, if you anticipate have more tax liability down the road, you can convert savings from a traditional IRA to a Roth IRA to pay taxes on the conversation, while allowing the money to grow tax-free.

    If you contribute to a 401(k) plan with your employer, you can choose to defer income from your paycheck and have it placed directly in your 401(k). You can place up to $20,500 to a 401(k) in 2022, plus an extra $6,500 if you're 50 or older. For 2023, you can contribute as much as $22,500 with an extra $7,500.

    If you're have freelance income, there are also retirement plans available, like a One-Participant 401(k) Plan, and you can deduct the funds you put there from your taxable income.

  • Tax-Loss Harvesting

    If you lose money on the sale of any securities, you can use that loss to reduce your taxable capital gains. This strategy is utilized more with short-term capital gains, as the tax rate is often higher than long-term. You can deduct up to $3,000 in capital gains losses per year, but additional losses can be carried over into future years.

  • Consider Paying Next Year's Bills Now —

    If you have unreimbursed medical expenses, you can write off those that are greater than 7.5% of your adjusted gross income. Paying property taxes early can also lead to deductions, and you can pay tuition to an undergraduate, graduate and professional degree courses for your or a child, as well as courses that improve your job skills in order to qualify for a Lifetime Learning Credit.

  • If Married, Filing Jointly or Separately —

    More than 9 out of 10 married couples file jointly. It helps spouses qualify for a higher standard deduction, as well as a variety of tax credits not available to single filers. However, if both spouses are higher-earning individuals, they may be in a lower tax bracket if they file separately. If one spouse has a lot of medical expenses, it may be preferable to file separately to qualify for the 7.5% limit for medical deductions.

  • Make Charitable Donations —

    You can deduct up to 60% of your adjusted gross income via charitable donations. Qualifying organizations include:

    • Non-profit organizations that are religious, scientific, educational, or for the prevention of cruelty to animals and children
    • Veterans' organizations
    • A domestic fraternal organization operating under the "lodge system," under the condition that the donations are used for charity
    • Cemetery companies
    • Any U.S. federal, state, local, or Native governments and subdivisions, under the condition that the donations are for public use
    • Often, a Canadian, Mexican, or Israeli organization, under the condition that the organization meets the criteria for a charity under United States law

    If you open a Donor-Advised Fund, you can get a tax reduction by putting money into it now, while still being able to wait to decide how the funds will get distributed down the road.

    If you are at least 70½ years old, you can make what's known as a qualified charitable distribution by transferring no more than $100,000 a year from a traditional IRA directly to a charity tax-free. If you are 72 or older, that donation qualifies as your required minimum distribution.

When you consult with a knowledgeable financial planner for your tax planning in Chesterfield, MO|With the help a financial planner in Chesterfield, MO, you can not only reduce your tax liability this year, but understand how to get further benefits once you retire.



Tax Planning for Chesterfield, MO Business Owners

With prudent tax planning, business owners can keep as much of their profits as possible. Some things to consider when tax planning for your Chesterfield, MO business include:

  • Assess How Your Business Is Structured —

    A lot goes into the structure of a business, and tax planning should be considered. Structuring your business as an LLC, sole proprietorship, partnership, or S or C corporation will have consequences for both your corporate and your individual tax rate.

  • Evaluate Your Employees' Employer-Sponsored Retirement Plans —

    There are many benefits to offering employees a retirement plan, and reducing your tax liability is chief among them. The "SECURE" Act of 2019 changed rules for creating and maintaining retirement plans for both small and large employers, so it's likely in your best interest to consult a financial advisor in Chesterfield, MO about how they may apply to your business.

    A Cash Balance Pension Plan may be ideal for higher-earning business owners and employees. While a business owner would need to significant amounts of money annually, the tax saving can be significant.

  • Consider Other Benefits For Your Employees —

    Merely offering raises can lead to higher taxes for you. See if your employees would be open to other benefits as part of their compensation, instead of just giving them a raise. Common fringe benefits include medical insurance, group life insurance, help with childcare expenses, transportation reimbursement, meals, more paid time off, or paying for courses that help in their career.

    You can also use accountable plans to reimburse employees for business expenses without counting the reimbursement as income.

  • Put Your Family On the Payroll —

    If you hire your children, they do not have to pay taxes on their first $12,000 in income, and you can help them start saving for retirement through an account like a ROTH IRA. You can double how much you're allowed to put into retirement plans if your spouse work for the business.

  • Buy a Company Vehicle —

    If you and your employees need to drive as part of the normal course of your business, you can deduct the transportation costs. You can make the deduction in two ways:

    • Take advantage of the standard mileage rate to deduct 58.5 cents per mile (for the first half of 2022) or 62.5 cents per mile (for July to December in 2022); or
    • Document your actual expenses, like maintenance, registration fees, and gas, and calculate if your deduction would be more than the standard mileage rate
  • Look into Tax Loss Carryforward —

    You're allowed to carryover some deductions into another year. Common carryover deductions are a home office deduction, net operating losses, business credits, and capital losses.

Tax laws for businesses are always in flux. One advantage of working with an experienced Chesterfield, MO tax planner is that they will work with you and your tax professional to discover if there are ways to strengthen your long-term financial success.

Other services we offer in Chesterfield, MO include:

Tax Planning Chesterfield, MO | Retirement Planners | Financial Advisor Near Me

Tax Planning in Chesterfield, MO | Correct Capital Wealth Management

At Correct Capital, our Chesterfield, MO tax planners know how important the financial health of your family or business is, both now and in the future. That is why we hold ourselves to the fiduciary standard: we are legally and ethically bound to act in your best interest. With tax law always changing, you need a team around you that will help, like your Chesterfield, MO financial advisor, tax preparer, and attorney. For help with tax planning, retirement planning, or any other financial needs in Chesterfield, MO, call Correct Capital today at 877-930-4015 or contact us through our website.


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