Tax Planning in Frontenac, MO

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

Tax Planning in Frontenac, MO. Tax liability is how much taxes you will need to pay to local, state, and federal authorities. While taxes may be one of the two certainties in life, there are perfectly legal ways you can reduce how much you owe. Tax planning is also essential for successful retirement planning. At Correct Capital, we work with local Frontenac, MO individuals, families, and businesses to find creative and time-tested ways to reduce their tax liability. Speak to Correct Capital's tax planners and fiduciary advisors today at 877-930-4015, reach out online, or read the article below to see how judicious tax planning can benefit you.


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Tax Planning for Frontenac, MO Individuals and Families

Prudent tax planning is essential for individuals and families who want to put more in their retirement accounts and have extra money for the short-term. Ways to reduce your tax liability when tax planning in Frontenac, MO are:

  • Standard Deduction vs. Itemizing —

    The standard deduction is flat figure that you can deduct from your taxable income. In 2022 and 2023, the standard deductions are:

    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 drawback 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.

  • Evaluate How You Are Saving For Retirement —

    Roth IRAs and Traditional IRAs both offer tax benefits in different ways. Money you put into a traditional IRA may be fully or partially deductible, and you pay taxes on it when you withdraw it. Money put into a Roth IRA cannot be deducted from your taxable income, but you will not be taxed on the withdrawal, as long certain requirements are met. Your age, income, and other factors will determine whether a Traditional or Roth IRA is preferable for your tax planning. For instance, if you anticipate being in a higher tax bracket in the future, you can convert savings from a traditional IRA to a Roth IRA to pay taxes on the transfer, and enjoy tax-free withdrawals when you need the money in retirement.

    If you have 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, or as much as $27,000 if you're 50 or older. For 2023, you can contribute up to $22,500 with an extra $7,500.

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

  • Tax-Loss Harvesting

    If you sell securities at a loss, you can offset the amount of capital gains tax you would be liable for if other securities sold at a profit. Tax-loss harvesting is more common with short-term capital gains, as the tax rate is usually higher than long-term. The maximum deductible amount is $3,000 per year, but you may be able to deduct higher losses in future years.

  • Consider Paying Next Year's Bills Now —

    If you have unreimbursed medical expenses, you can write off those that exceed 7.5% of your adjusted gross income. Paying property taxes early can also help you reduce your taxable income, and you can pay for a kid's tuition or for career-boosting classes for you early for a Lifetime Learning Credit.

  • If Married, Filing Jointly or Separately —

    The IRS reports that roughly 95% of married couples choose to file joint tax returns. It's the only way to qualify for certain tax credits and reductions. However, if both spouses are higher-earning individuals, filing separately may reduce their combined tax liability. If one spouse has a lot of medical expenses, 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 when donating to certain organizations. Qualifying 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," as long as the money are used for charity
    • Cemetery companies
    • Any U.S. federal, state, local, or Native governments and subdivisions, as long as the funds are meant to benefit the public
    • In many cases, a Canadian, Mexican, or Israeli organization, as long as the organization would qualify as a charity under U.S. law

    If you save money in a Donor-Advised Fund, you can contribute a bulk 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 of age, you can make what's known as a qualified charitable distribution by transferring up to $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 qualifies as your required minimum distribution.

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



Tax Planning for Frontenac, MO Businesses

Business owners can use smart tax planning to keep more money in their business. Ways to reduce your tax liability when tax planning for your Frontenac, MO business include:

  • Review the Structure of Your Business —

    There are many things to consider when deciding how to structure or restructure your business. 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 the Retirement Plans You Offer Employees —

    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 Frontenac, 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 an employer must considerable amounts of money each year, the tax benefits are high.

  • Consider Other Benefits For Your Employees —

    Merely offering raises can result in higher taxes for you. See if your employees would be open to other benefits rather than just giving them a raise. Common fringe benefits include medical insurance, group life insurance, help with childcare expenses, transportation reimbursement, meals, sick leave, or continuing education reimbursement.

    You can also use accountable plans to pay employees back 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 begin to save in a vehicle like a ROTH IRA. You can double how much you're allowed to put into retirement plans by having 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 subtract transportation costs from your taxable income. You can make the deduction in two ways:

    • Take advantage of the standard mileage rate to deduct 58.5 cents per mile (for January to June in 2022) or 62.5 cents per mile (for the last half of 2022); or
    • Keep a record of your actual expenses, like maintenance, registration fees, and gas, and figure out if your deduction would be more than the standard mileage rate
  • Consider Tax Loss Carryover —

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

Tax laws for businesses are always changing. A key advantage of working with a knowledgeable Frontenac, MO tax planner is that they will work with you and the person who prepares your taxes to determine if there are ways to improve your long-term financial success.

Other services we offer in Frontenac, MO include:

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

Tax Planning in Frontenac, MO | Correct Capital Wealth Management

At Correct Capital, our Frontenac, MO tax planners 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; you will only hear recommendations that are independent, objective, and unbiased. With tax law always changing, you need a team around you that will help, like your Frontenac, MO financial advisor, tax professional, and attorney. For help with tax planning, asset management, or any other financial needs in Frontenac, MO, call Correct Capital today at 877-930-4015 or contact us online.


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