Tax Planning in McKinney, TX

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

Tax Planning in McKinney, TX. Tax liability refers to the amount you owe in taxes to local, state, and federal authorities. While it’s inevitable that a part of your earnings or profits goes to taxes, there are numerous legal strategies to lessen your tax burden. Tax planning is also vital to successful retirement planning. At Correct Capital, we don’t offer tax advice, but we work alongside local McKinney, TX individuals, families, and businesses to explore effective and tried-and-true ways to reduce their tax obligations. We could suggest maximizing deductible retirement contributions, which could reduce 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 McKinney, TX Individuals and Families

Proactive tax planning can help individuals and families increase their retirement savings and give them more money for both the present and the future. A few things to consider when tax planning in McKinney, TX:

  • Standard Deduction vs. Itemizing —

    The standard deduction is a automatic amount that reduces your taxable income without needing specific proof of deductions. 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

    When your deductible income is more than the standard deduction, itemizing each eligible deduction may be advantageous. The trade-off is that itemizing takes more time, as you need to provide evidence for each deduction. A financial planner in McKinney, TX can work with you to decide whether claiming the standard or itemized deduction is more suitable.

  • Review Your Retirement Accounts —

    Roth IRAs and Traditional IRAs both present unique tax benefits. A traditional IRA allows for contributions that may be deductible, with taxes deferred until you withdraw funds. Roth IRA contributions, in contrast, are not deductible but allow for tax-free growth on your investments. Which account benefits you most will depend on your specific tax planning needs. 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). For 2024, you can contribute up to $23,000 to a 401(k), plus an extra $7,500 if you are over age 50.

    If you're self-employed or have freelance income, you may also establish a retirement plan that suits your situation. Options include a Simplified Employee Pension (SEP) IRA or a One-Participant 401(k) Plan, enabling you to deduct your contributions.

  • Tax-Loss Harvesting

    If you sell securities at a loss, you can offset the amount of capital gains tax owed on profits from other securities. This approach is particularly beneficial for short-term capital gains, which are often taxed at higher rates than long-term gains. You can deduct up to $3,000 in capital losses each year, with any remaining losses rolled over into future tax years.

  • Consider Paying Next Year's Bills Now —

    For unreimbursed medical expenses, you can deduct costs that surpass 7.5% of your adjusted gross income. Additionally, you might consider paying property taxes early (if allowed by your municipality), prepaying a child’s tuition, or covering your own career-enhancing classes for a Lifetime Learning Credit.

  • If Married, Filing Jointly or Separately —

    Roughly 95% of married individuals file jointly, as this is required for some tax benefits and credits. In cases where one spouse earns more, filing separately could result in a lower tax bracket for the higher earner. Separate filing may also make sense if one partner has considerable medical costs, making it easier to meet the 7.5% medical deduction limit.

  • 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
    • Non-profits supporting veterans
    • Fraternal organizations under a "lodge system" provided funds are used for 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.

    Once you reach age 70½, you’re eligible to make a qualified charitable distribution by transferring up to $105,000 annually from your IRA directly to a charity without tax consequences. 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.

When you choose an experienced financial adviser for tax planning in McKinney, TX, you’re able to reduce current tax liability while planning for taxes well into 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 McKinney, TX 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 —

    When you don’t contribute the maximum allowable to tax-advantaged retirement accounts like Traditional IRAs, Roth IRAs, or 401(k)s, you may miss out on valuable tax deductions and long-term growth.

    How Correct Capital Helps: We evaluate your financial situation to ensure you’re contributing as much as feasible, which can reduce taxable income while building a strong retirement foundation.

  • 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 team checks your tax return for any missed credits and deductions, with the goal of increasing your refund or decreasing your tax bill.

  • Poor Record-Keeping —

    A lack of organized financial records may result in missed deductions and complications at tax filing time, and without the right documents, you may have trouble supporting 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 —

    Neglecting tax-efficient investment strategies, such as asset location or tax-loss harvesting, can erode overall returns.

    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. Neglecting estimated tax payments may result in penalties.

    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: We help you explore the advantages of HSAs and FSAs, advising on how pre-tax contributions for healthcare can lower your taxable income.

  • Overlooking Education Savings Plans —

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

    How Correct Capital Helps: Our team assists you in establishing education savings plans that feature tax-deferred growth and potential state tax deductions.

  • Not Reviewing Withholding Allowances

    Having too much or too little tax withheld from your paycheck can lead to either a large refund or an unexpected tax bill.

    How Correct Capital Helps: We work with you to adjust your withholding allowances for improved cash flow and reduced surprises during tax season.

  • 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 McKinney, TX Business Owners

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

  • Review the Structure of Your Business —

    Your business structure plays a significant role in tax planning and should be carefully evaluated. Forming your business as an LLC, sole proprietorship, partnership, or S or C corporation will influence both the corporate and personal 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 McKinney, TX 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 —

    Hiring family members can bring tax benefits. Children can work for you tax-free up to $14,600, and they can 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 McKinney, TX, both you and your employees could use a company vehicle and deduct the associated costs. You can take this deduction using one of two methods:

    • Take the standard mileage deduction of 67 cents per mile for gas and electric vehicles; or
    • Maintain records of actual costs like maintenance, registration, and fuel to calculate whether this deduction is greater than the standard mileage rate.
  • Consider Fringe Benefits For Your Employees —

    Raising employee salaries may lead to increased employment tax costs. See if employees are open to receiving fringe benefits as part of their pay package rather than a higher paycheck. 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 allow for reimbursing employees for specific expenses, like travel, meals, or entertainment, without these amounts counting as income.

  • Look into Carryover Deductions —

    If certain deductions can’t be claimed this year, it may be possible to carry them forward into a future tax year. These may include deductions such as home office expenses, net operating losses, business credits, and capital losses.

Tax laws for businesses are constantly evolving. Partnering with a professional tax planner in McKinney, TX means they work with you and your tax expert to identify strategies for enhancing long-term financial outcomes.

Common Tax Planning Mistakes for McKinney, TX Businesses

Efficient tax planning can help businesses reduce tax burdens and boost profitability. Yet, numerous businesses make frequent tax errors that result in increased tax bills, overlooked deductions, and potential penalties. Here’s a look at frequent tax pitfalls and how Correct Capital can help businesses steer clear of them.

  • Not Paying Estimated Quarterly Taxes —

    Failing to pay or underpaying quarterly estimated taxes can result in IRS penalties and interest charges. This issue frequently affects small businesses, freelancers, and companies with irregular income.

    How Correct Capital Helps: Our team assists in calculating and timing estimated tax payments to keep businesses compliant with IRS rules and avoid penalties.

  • Neglecting Retirement Plan Contributions for Owners and Employees —

    Retirement plan contributions are often underused by businesses to reduce taxable income. 401(k)s, SEP IRAs, and Solo 401(k)s offer significant tax advantages for business owners and employees.

    How Correct Capital Helps: We work with businesses to set up and maximize retirement plans, which reduce taxes while also helping attract and retain talent.

  • Not Planning for Profitability and Cash Flow —

    Some businesses only focus on minimizing their current tax bill, neglecting long-term growth and profitability. Such a narrow focus may cause missed opportunities for reinvestment or tax-efficient growth.

    How Correct Capital Helps: Our team provides tax planning that goes beyond short-term cuts, supporting businesses in planning for growth, reinvesting, and handling cash flow efficiently.

  • Neglecting Exit and Estate Planning —

    A succession plan addressing the financial aspects of selling a business is often overlooked by owners. Owners frequently concentrate on operations and may neglect how to allocate proceeds from a sale in a tax-effective manner. Without proper estate planning, owners might not fully address their loved ones’ and beneficiaries’ financial security.

    How Correct Capital Helps: We assist business owners with exit planning, guiding them in making informed decisions on how to allocate sale proceeds. Our approach involves identifying the purpose of the funds and applying estate planning strategies, which consider beneficiaries and minimize taxes.

Tax Planning in McKinney, TX | Correct Capital Wealth Management

Our McKinney, TX financial advisors and tax planners at Correct Capital know that your financial security—whether for family or business—is crucial now and in the long term. For this reason, we follow the fiduciary standard and our I.O.U. promise, meaning that every recommendation we provide is independent, objective, and unbiased. Since tax laws are always changing, it’s vital to surround yourself with a solid team, such as your McKinney, TX financial advisor, tax professional, and legal advisor. If you need help with tax planning, retirement strategies, or other financial services in McKinney, TX, call Correct Capital today at 877-930-4015 or get in touch online.


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