Tax Planning
Tax Planning in Glendale, MO. Tax liability is how much you owe in taxes to local, state, and federal entities. Even though taxes may be one of the two certainties in life, there are perfectly legal ways to reduce your tax liability. Tax planning is also essential for successful retirement planning. At Correct Capital, we work with local Glendale, MO individuals, families, and businesses to find creative and proven ways to reduce how much they owe. Call Correct Capital's tax planners and fiduciary advisors today at 877-930-4015, reach out online, or read on to learn how diligent tax planning can keep more money in your account both now and down the road.
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Tax Planning for Glendale, MO Individuals and Families
Smart tax planning can help individuals and families put more in their retirement accounts and afford them more money for both now and the near future. Ways to reduce how much you owe when tax planning in Glendale, MO include:
- Standard Deduction vs. Itemizing —
The standard deduction is flat figure that reduces the amount of income you are taxed on. 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 more income that shouldn't be taxed 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 differ in how they affect your taxes. Contributions to a traditional IRA may be fully or partially deductible, and the money is not taxed until you withdraw it. Savings 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 what may be better for you for your tax planning. For example, if you expect your taxes to go up in the future, you can convert funds 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 with your employer, you can choose to have earnings 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, plus an extra $6,500 if you're at least 50 years old. For 2023, you can contribute as much as $22,500 with an extra $7,500.
If you're self-employed, you can open up an individual retirement plan, such as a One-Participant 401(k) Plan, and you can deduct your contributions there.
- Tax-Loss Harvesting —
If you sell stocks, bonds, or options at a loss, 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 typically higher than long-term. The maximum deductible amount is $3,000 per year, but additional losses can be carried over into future years.
- Consider Paying Next Year's Bills Now —
If you have medical expenses your insurance didn't cover, you can deduct 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 child'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 file jointly. It's the only way to get certain tax credits and reductions. But, if both spouses have substantial earnings, filing separately may reduce their combined tax liability. If one spouse received substantial medical treatment in a given year, it may make sense to file separately to meet the 7.5% threshold for unreimbursed medical expenses.
- Contribute to Charity —
You can deduct up to 60% of your adjusted gross income when donating to certain organizations. Accepted charities 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," as long as the money are used for charity
- Cemetery companies
- Any government entities, under the condition that the donations 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 large amount now for an immediate tax reduction, and recommend how the funds are distributed over the years that follow.
If you are older than 70½, 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 charity without having to pay taxes on it. If you are 72 or older, that donation counts as your required minimum distribution.
When you use a knowledgeable financial planner for your tax planning in Glendale, MO|With the help a financial adviser in Glendale, MO, they can help put more money in your pocket now while also setting you up for a financially secure future.
Tax Planning for Glendale, MO Businesses
Business owners can use effective tax planning to retain more money in their business. Some things to consider when tax planning for your Glendale, MO business include:
- Assess 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 affect how much you pay in taxes both as a business and individually.
- Review Your Employees' Employer-Sponsored Retirement Plans —
Offering your employees retirement plans, such as 401(k)s, 403(b)s, and other defined contribution plans is a great way to reduce your tax liability. The "SECURE" Act of 2019 changed rules for creating and maintaining retirement plans for both small and large employers, so it may be best to speak to a financial advisor in Glendale, 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 you would have to significant sums of money annually, the tax saving can be significant.
- Consider Other Benefits For Your Employees —
Merely offering more money can result in higher taxes for you. See if your employees would be willing to accept other benefits as part of their compensation, instead of just giving them more money. 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 set up accountable plans to pay employees back for business expenses without counting the reimbursement as income.
- Put Your Family On the Payroll —
If you get your children on the payroll, 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 such as a ROTH IRA. If both you and your spouse work for the business, you can double your retirement plan contributions.
- Have 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 figure out if your deduction would be more than the standard mileage rate
- Consider Carryover Deductions —
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 changing. One benefit of consulting with an experienced Glendale, MO tax planner is that they will work with you and your tax professional to identify if there are ways to improve your long-term financial success.
Other services we offer in Glendale, MO include:
Tax Planning in Glendale, MO | Correct Capital Wealth Management
At Correct Capital, our Glendale, MO financial advisors know strong financial health is key to your overall success. 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, you need a team around you that will help, like your Glendale, MO financial advisor, tax preparer, and attorney. For help with tax planning, retirement planning, or any other financial services in Glendale, MO, call Correct Capital today at 877-930-4015 or contact us through our website.
