Tax Planning in Clayton, MO

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

Tax Planning in Clayton, MO. Tax liability is how much taxes you will need to pay to local, state, and federal entities. While Uncle Sam will always collect some percentage of your earnings or profits, The IRS allows for several ways you can reduce how much you owe. Tax planning is also essential for successful retirement planning. At Correct Capital, we work with Clayton, MO individuals, families, and businesses in the Clayton, MO area to find creative and proven strategies for reducing how much they owe. Speak to Correct Capital's financial planners and fiduciary advisors today at 877-930-4015, reach out online, or read the article below to see how diligent tax planning can benefit you.


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Tax Planning for Clayton, MO Individuals and Families

Diligent tax planning can help individuals and families increase their retirement savings and have extra money for the short-term. Ways to reduce your tax liability when tax planning in Clayton, MO are:

  • Standard Deduction vs. Itemizing —

    The standard deduction is specific dollar amount that reduces the amount of income you are taxed on. 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 doing your taxes takes longer, 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 differ in how your savings are taxed. Contributions to a traditional IRA may be fully or partially deductible, and you pay taxes on it when you withdraw it. Roth IRA contributions cannot be deducted from your taxable income, but the money grows tax free. Your unique situation will determine what may be better for you for your tax planning. For example, if you anticipate have more tax liability in the future, you can convert savings from a traditional IRA to a Roth IRA to pay taxes on the conversation, and enjoy tax-free withdrawals when you need the money in retirement.

    If you contribute to a 401(k) plan through your job, you can choose to have money deposited into your 401(k) account instead of it going to your paycheck. You can place up to $20,500 to a 401(k) in 2022, or as much as $27,000 if you're 50 or older. For 2023, you can deposit up to $22,500 or $30,000.

    If you're self-employed, there are also retirement plans available, such as a One-Participant 401(k) Plan, and you can deduct your contributions there.

  • Tax-Loss Harvesting

    If you lose money on the sale of any stocks, bonds, or options, you can use that loss to reduce your taxable capital gains. Tax-loss harvesting is utilized more with short-term capital gains, as the tax rate is usually 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 higher than 7.5% of your adjusted gross income. You can also make deductions this year for property taxes if you pay early (and if your municipality allows it), pay for a kid's tuition or for career-boosting classes for you early in order to qualify for a Lifetime Learning Credit.

  • If Married, Filing Jointly or Separately —

    More than 9 out of 10 married couples choose to file joint tax returns. 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 received substantial medical treatment in a given year, it may be preferable to file separately to qualify for the 7.5% threshold for medical deductions.

  • Make Charitable Donations —

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

    • Non-profit organizations that are religious, scientific, educational, or dedicated to 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 funds are meant to benefit the public
    • Often, a Canadian, Mexican, or Israeli organization, under the condition that the organization would qualify as a charity under U.S. law

    If you open a Donor-Advised Fund, you can contribute a large amount now for an immediate tax reduction, and recommend how the funds are distributed over the years that follow.

    If you are at least 70½ years old, you can make what's called a qualified charitable distribution by transferring no more than $100,000 a year from a traditional IRA directly to a non-profit organization without having to pay taxes on it. If you are 72 or older, that transfer counts as your required minimum distribution.

When you consult with an experienced financial adviser for your tax planning in Clayton, MO|With the assistance of a financial planner in Clayton, MO, you can not only pay less in taxes this year, but understand how to get further benefits once you retire.



Tax Planning for Clayton, MO Business Owners

Business owners can use smart tax planning to retain more money in their business. Ways to owe less in taxes when tax planning for your Clayton, MO business include:

  • Evaluate the Structure of Your Business —

    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 affect both your corporate and your individual tax rate.

  • Review Your Employees' Employer-Sponsored Retirement Plans —

    Offering retirement plans not only attracts and retains talent, but it also allows you to deduct contributions. The "SECURE" Act of 2019 offers new benefits for employers who offer 401(k)s and SIMPLE IRAs with automatic enrollment, so it's recommended to consult a financial advisor in Clayton, MO about how those changes affect your tax planning.

    For higher-earning business owners with higher-earning employees, consider a Cash Balance Pension Plan. While you would have to significant sums of money per year, the tax saving can be significant.

  • Consider Other Benefits For Your Employees —

    Increasing your employees' wages can lead to higher taxes for you. See if your employees would be open to other benefits rather than just giving them a higher paycheck. Common fringe benefits include medical insurance, group life insurance, childcare assistance, transportation reimbursement, meals, more paid time off, or continuing education reimbursement.

    You can also use accountable plans to reimburse employees for certain expenses like travel, meals, or entertainment without having to report them as employee income.

  • Put Your Family On the Payroll —

    Your kids can work for you tax-free on income up to $12,000, and you can help them begin to save in a vehicle such as a ROTH IRA. You can double your retirement plan contributions if your spouse work for the business.

  • Use 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
    • Keep a record of your actual expenses, like maintenance, registration fees, and gas, and calculate whether those allow you to deduct more than the standard mileage rate would have
  • Consider Carryover Deductions —

    You're allowed to carryover some deductions into subsequent years. These can include a home office deduction, net operating losses, business credits, and capital losses.

Tax laws for businesses are always in flux. A key benefit of working with a professional Clayton, MO tax planner is that they will work with you and your tax professional to determine if there are ways to strengthen your personal and business financial success.

Other services we offer in Clayton, MO include:

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

Tax Planning in Clayton, MO | Correct Capital Wealth Management

At Correct Capital, our Clayton, MO financial advisors know how important the financial health of your family or business is, both now and in the future. That's why we give our I.O.U. promise; all the advice we give you will be independent, objective, and unbiased. With tax law always changing, it's important to put a team around you that will help, like your Clayton, MO financial advisor, tax preparer, and attorney. For help with tax planning, retirement planning, or any other financial needs in Clayton, MO, call Correct Capital today at 877-930-4015 or contact us online.


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