Tax Planning in Knoxville, TN

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Tax PlanningReduce Your Tax Liability With Correct Capital's Financial Advisors in St. Louis

Tax Planning in Knoxville, TN. Tax liability refers to the amount you owe in taxes to local, state, and federal authorities. Although paying taxes is unavoidable, various lawful strategies can minimize how much you owe. Tax planning is also vital to successful retirement planning. At Correct Capital, we don’t give tax advice; however, we collaborate with local Knoxville, TN people, families, and companies to explore effective and tried-and-true ways to decrease their tax obligations. For instance, we might advise an individual to maximize deductible contributions to their retirement plan, which can help lessen tax costs. Reach out to Correct Capital's tax planners and fiduciary advisors today at 877-930-4015, get in touch online, or continue reading to understand the benefits of prudent tax planning.



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Tax Planning for Knoxville, TN Individuals and Families

Proactive tax planning can help individuals and families increase their retirement savings and provide them with more money for both today and in the near future. Consider these elements when tax planning in Knoxville, TN:

  • Standard Deduction vs. Itemizing —

    The standard deduction is a preset amount that allows a straightforward deduction from your taxable income. In 2024, the standard deductions are:

    • $14,600 for single filers
    • $29,200 for married, filing jointly
    • $14,660 for married, filing separately
    • $21,900 for head of household

    If your deductible expenses exceed these amounts, you may benefit from itemizing your deductions, where you list each eligible deduction separately. The drawback is that itemizing can be time-consuming and requires proof of each deduction. A financial planner in Knoxville, TN can work with you to decide whether taking the standard deduction or itemizing is more beneficial.

  • Review Your Retirement Accounts —

    Roth IRAs and Traditional IRAs both present unique tax benefits. Contributions to a traditional IRA may be fully or partially deductible, and taxes are only applied upon withdrawal. On the other hand, Roth IRAs do not offer a deduction for contributions, yet allow your money to grow tax-free. The ideal choice depends on your personal financial and tax situation. For example, if you anticipate higher taxes in the future, you might consider transferring money from a traditional IRA to a Roth IRA—a process known as a Roth conversion—paying taxes now but securing future tax-free growth.

    If you have a 401(k) plan with your employer, you can set aside income from your paycheck, placing it straight into your 401(k). The 401(k) contribution limit for 2024 is $23,000, along with an additional $7,500 for individuals 50 or older.

    Freelancers or self-employed individuals can open up personal retirement plans tailored to their needs. Options include a Simplified Employee Pension (SEP) IRA or a One-Participant 401(k) Plan, which allow you to deduct your contributions.

  • Tax-Loss Harvesting

    Selling securities at a loss allows you to reduce the capital gains tax on profitable sales. This strategy is commonly used with short-term capital gains, as these are usually taxed more heavily than long-term gains. Each year, up to $3,000 in capital losses can be deducted, and extra losses can be carried forward to future years.

  • Consider Paying Next Year's Bills Now —

    Medical expenses not reimbursed by insurance can be deducted if they exceed 7.5% of your AGI. You can also make early payments for property taxes (if your local rules allow it), a child’s tuition, or professional courses, potentially benefiting from the Lifetime Learning Credit.

  • If Married, Filing Jointly or Separately —

    Approximately 95% of married couples choose to file jointly, which is the only way to qualify for certain tax credits and deductions. However, if one spouse is a higher earner, filing separately might place them in a lower tax bracket. If one spouse incurs significant medical expenses, it might be advantageous to file separately to meet the 7.5% threshold for medical deductions.

  • Make Charitable Donations —

    By donating to qualifying organizations, you may deduct up to 60% of your adjusted gross income. According to IRS Publication 526, qualifying organizations include:

    • Non-profits that are religious, scientific, educational, or focused on preventing cruelty to animals or children
    • Organizations dedicated to veterans
    • A domestic fraternal organization that operates under a "lodge system" as long as the funds are directed toward charity
    • Organizations managing cemeteries
    • Any U.S. federal, state, local, or Native governments and subdivisions, as long as funds are for public use
    • Certain Canadian, Mexican, or Israeli organizations that would be considered charitable under U.S. law

    *According to IRS Publication 526 (2023), Charitable Contributions

    Opening a Donor-Advised Fund allows for an upfront tax deduction with the flexibility to recommend how funds are distributed over time.

    If you are over 70½, you can make a qualified charitable distribution by transferring as much as $105,000 a year from a traditional IRA directly to a charity, tax-free. At age 73 and over, this donation meets the requirements for your required minimum distribution and could lessen both future required distributions and your tax bill.

By working with an experienced financial adviser for tax planning in Knoxville, TN, you can reduce your tax liability this year and create a plan for managing taxes through retirement. Correct Capital is here to help you keep more of your money today and establish a financially secure future.

Common Tax Planning Mistakes for Knoxville, TN Individuals and Families

Smart tax planning is vital for your family’s overall financial security. However, mistakes in tax planning can lead to paying more in taxes than necessary or missing out on potential savings. Here’s a look at some typical tax planning missteps and how Correct Capital helps you avoid them:

  • Not Maximizing Retirement Contributions —

    By not maximizing contributions to retirement accounts like Traditional IRAs, Roth IRAs, or 401(k)s, you risk losing out on tax deductions and long-term growth opportunities.

    How Correct Capital Helps: Our team assesses your finances to confirm you’re maximizing contributions, minimizing your tax burden while enhancing your retirement savings.

  • Overlooking Available Tax Credits and Deductions —

    Many miss out on significant credits and deductions, such as the Earned Income Tax Credit, Child Tax Credit, or deductions for healthcare and education expenses.

    How Correct Capital Helps: Our advisors may review your tax return to see if you’ve claimed all available credits and deductions, aiming to maximize your refund (if eligible) or minimize any amount owed.

  • Poor Record-Keeping —

    Disorganized financial records can lead to missed deductions and complications when filing taxes. Without accurate documentation, you might struggle to substantiate claims if audited.

    How Correct Capital Helps: We assist you in setting up effective record-keeping systems and locating necessary documentation, ensuring all receipts and documents are properly organized and accessible when needed.

  • Ignoring Tax-Efficient Investment Strategies —

    When investment decisions are made without considering tax consequences, returns may be reduced. This often happens when asset location strategies are ignored or tax losses are not harvested.

    How Correct Capital Helps: Our team provides insight on tax-efficient investment choices, assisting you in minimizing taxes on dividends, interest, and capital gains through strategic asset selection.

  • Failing to Plan for Life Changes —

    Significant life changes, such as marriage, divorce, becoming a parent, or purchasing a home, can greatly affect your tax obligations. Overlooking these changes could result in unforeseen tax bills.

    How Correct Capital Helps: We collaborate with you to update your tax planning strategies in response to life changes, ensuring you benefit from new deductions or credits and stay compliant with tax regulations.

  • Underestimating Estimated Tax Payments —

    If you earn income not subject to withholding, such as freelance or investment income, estimated tax payments may be necessary. Without making these payments, you could face fines and interest charges.

    How Correct Capital Helps: We work with you to build cash reserves to cover estimated tax payments, helping you avoid penalties and interest fees.

  • Not Utilizing Health Savings Accounts (HSAs) and Flexible Spending Accounts (FSAs)

    HSAs and FSAs allow for tax-efficient healthcare spending, but they’re often underutilized by eligible individuals.

    How Correct Capital Helps: Our advisors explain the advantages of HSAs and FSAs and determine if they’re right for you, helping you set aside pre-tax funds for medical costs to reduce taxes.

  • Overlooking Education Savings Plans —

    Failing to consider 529 college savings plans may mean missing valuable tax benefits for education savings.

    How Correct Capital Helps: We guide you in setting up education savings accounts that provide tax-deferred growth and may offer state tax deductions.

  • Not Reviewing Withholding Allowances

    Incorrect tax withholding—either too much or too little—may result in a big refund or an unexpected tax bill.

    How Correct Capital Helps: We assist in adjusting your W-4 form to ensure correct withholding, helping improve cash flow and avoid surprises when filing taxes.

  • Missing Opportunities for Charitable Contributions —

    If you don’t track or plan your charitable contributions, you could lose valuable deduction opportunities.

    How Correct Capital Helps: We assist with planning your charitable giving to maximize tax benefits, including helping with Qualified Charitable Distributions (QCDs) if you qualify.

Tax Planning for Knoxville, TN Business Owners

Business owners in Knoxville, TN can use strategic tax planning to keep more revenue within their business. Keep the following in mind for effective tax planning for your Knoxville, TN business:

  • Review the Structure of Your Business —

    How your business is structured is key for tax planning and requires thoughtful consideration. Structuring your business as an LLC, sole proprietorship, partnership, or S or C corporation will affect both corporate and individual tax rates.

  • Review the Retirement Plans You Offer Employees —

    Setting up retirement plans like 401(k)s, 403(b)s, and similar options can help reduce tax obligations. With changes under the "SECURE" Act of 2019, speaking to a financial advisor in Knoxville, TN about retirement plan tax benefits is recommended.

    For high-income business owners with well-paid employees, consider a Cash Balance Pension Plan. While this may involve substantial contributions, the tax savings can be considerable.

  • Have Your Family Work For The Business —

    Employing family members can yield tax advantages. Children can earn up to $14,600 without paying taxes and could start saving in a ROTH IRA. Employing your spouse can allow for increased retirement contributions, potentially doubling your retirement savings.

  • Use a Company Vehicle —

    Depending on your business activities in Knoxville, TN, both you and your employees could use a company vehicle and deduct the associated costs. There are two options for claiming this deduction:

    • Use the standard mileage rate to deduct 67 cents per mile (applicable for both gas and electric vehicles); or
    • Keep a record of actual expenses, including maintenance, registration, and gas, to see if this results in a larger deduction than the standard mileage rate.
  • Consider Fringe Benefits For Your Employees —

    Increasing wages for employees can drive up employment tax expenses. Explore the possibility of offering fringe benefits instead of wage raises. Possible fringe benefits that may reduce tax liabilities are health insurance, group life insurance, childcare assistance, transport reimbursements, meals, family or medical leave, and continuing education reimbursement.

    Accountable plans can also be used to reimburse employees for expenses like travel, meals, or entertainment without these amounts being reported as employee income.

  • Look into Carryover Deductions —

    If certain deductions aren’t usable this year, you may be able to apply them in a different tax year. Potential carryover deductions are home office deductions, net operating losses, business credits, and capital losses.

Tax regulations for businesses are always in flux. Partnering with a professional tax planner in Knoxville, TN means they work with you and your tax expert to identify strategies for enhancing long-term financial outcomes.

Common Tax Planning Mistakes for Knoxville, TN Businesses

With smart tax planning, businesses can minimize liabilities and enhance profitability. However, many businesses fall into common tax mistakes that may lead to higher taxes, missed deductions, or even penalties. Below are some of the most common tax planning errors businesses make and how Correct Capital can help you avoid them.

  • Not Paying Estimated Quarterly Taxes —

    Failing to pay or underpaying quarterly estimated taxes can result in IRS penalties and interest charges. Small businesses, freelancers, and companies with fluctuating income are particularly susceptible to this.

    How Correct Capital Helps: We help businesses accurately calculate and schedule estimated tax payments, ensuring compliance with IRS deadlines and preventing unnecessary penalties.

  • Neglecting Retirement Plan Contributions for Owners and Employees —

    Retirement plan contributions are often underused by businesses to reduce taxable income. Options such as 401(k)s, SEP IRAs, and Solo 401(k)s deliver notable tax benefits for both owners and staff.

    How Correct Capital Helps: Our team helps set up and optimize retirement plans that lower taxes and serve as a tool for recruiting and retaining employees.

  • Not Planning for Profitability and Cash Flow —

    Focusing solely on cutting current taxes often leads businesses to miss out on planning for sustained growth and profitability. Such a narrow focus may cause missed opportunities for reinvestment or tax-efficient growth.

    How Correct Capital Helps: We deliver thorough tax planning to support future growth, optimize reinvestment, and ensure efficient cash flow management.

  • Neglecting Exit and Estate Planning —

    Business owners often fail to create a succession plan to address the financial aspects of selling their business. While they may focus heavily on operations, they might miss planning for how to manage and allocate the sale proceeds in a tax-efficient way. Additionally, without estate planning, owners may miss opportunities to ensure beneficiaries and loved ones are taken care of.

    How Correct Capital Helps: Our team supports business owners in exit planning, helping them decide how to manage the proceeds from a sale. We aim to identify the purpose of sale proceeds and apply estate planning principles, so beneficiaries are accounted for and taxes are efficiently managed.

Tax Planning| Retirement Planners | Financial Advisor Near Me

Tax Planning in Knoxville, TN | Correct Capital Wealth Management

At Correct Capital, our Knoxville, TN financial advisors and tax planners understand how essential the financial health of your family or business is, both now and in the future. That’s why we adhere to the fiduciary standard and our I.O.U. promise: all the advice we offer is independent, objective, and unbiased. As tax regulations evolve, it’s important to work with a team that includes your Knoxville, TN financial advisor, tax specialist, and attorney. For assistance with tax planning, retirement planning, or other financial needs in Knoxville, TN, reach out to Correct Capital at 877-930-4015 or contact us online.


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