Tax Planning in Sunnyvale, CA

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

Tax Planning in Sunnyvale, CA. Tax liability refers to the amount you owe in taxes to local, state, and federal authorities. While Uncle Sam will always get some portion of your earnings or profits, there are perfectly legal ways to reduce your tax liability. Tax planning is also vital to successful retirement planning. At Correct Capital, we don’t offer tax advice, but we work alongside local Sunnyvale, CA people, families, and companies to explore effective and tried-and-true ways to lower their tax liability. 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, connect with us online, or keep reading to learn how proactive tax planning can benefit you.



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Tax Planning for Sunnyvale, CA Individuals and Families

Smart tax planning can help individuals and families grow their retirement savings and give them more money for both the present and the future. Here are some key points when tax planning in Sunnyvale, CA:

  • Standard Deduction vs. Itemizing —

    The standard deduction is a automatic amount that you can deduct from your taxable income without additional documentation. 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 Sunnyvale, CA can help determine whether claiming the standard or itemized deduction is more beneficial.

  • Review Your Retirement Accounts —

    Roth IRAs and Traditional IRAs both offer tax benefits, but in distinct ways. 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. Which account benefits you most will depend on your specific tax planning needs. If you expect future tax rates to increase, a Roth conversion, or moving funds from a traditional IRA to a Roth IRA, might be wise to lock in tax-free growth while paying taxes upfront.

    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.

    For self-employed individuals or those with freelance income, individual retirement plans are also available. 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. Tax-loss harvesting is especially useful for short-term gains, where tax rates are higher than for 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 —

    If you have unreimbursed medical expenses, you may be able to deduct amounts exceeding 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 —

    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. 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 —

    You can deduct up to 60% of your adjusted gross income by making donations to certain organizations. According to IRS Publication 526, qualifying organizations include:

    • Religious, scientific, educational, or anti-cruelty non-profit organizations for animals and children
    • Non-profits supporting veterans
    • Fraternal organizations under a "lodge system" provided funds are used for charity
    • Organizations managing cemeteries
    • Federal, state, local, or Native government entities, provided funds are for public purposes
    • In some cases, Canadian, Mexican, or Israeli organizations if they qualify as U.S.-equivalent charities

    *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 up to $105,000 per 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.

When you choose an experienced financial adviser for tax planning in Sunnyvale, CA, you’re able to reduce current tax liability while planning for taxes well into retirement. At Correct Capital, our goal is to help you save now and position yourself for financial stability in the future.

Common Tax Planning Mistakes for Sunnyvale, CA Individuals and Families

Effective tax planning is crucial for your family’s financial health. 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: 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 —

    Valuable tax credits and deductions—like the Earned Income Tax Credit, Child Tax Credit, and deductions for medical and educational expenses—are often overlooked by individuals.

    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 —

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

    How Correct Capital Helps: We help you implement tax-efficient investment strategies, including selecting the best vehicles and methods to lower taxes on dividends, interest, and gains.

  • Failing to Plan for Life Changes —

    Life events, including marriage, divorce, welcoming a child, or buying a property, often alter your tax landscape considerably. Overlooking these changes could result in unforeseen tax bills.

    How Correct Capital Helps: We help you adjust your tax strategy based on life changes, allowing you to take advantage of new tax breaks while remaining compliant with tax laws.

  • Underestimating Estimated Tax Payments —

    For income not subject to withholding—like freelance or investment earnings—you may be required to make estimated tax payments. Neglecting estimated tax payments may result in penalties.

    How Correct Capital Helps: We help you prepare your cash flow to cover estimated tax payments, avoiding fines and added interest.

  • 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 offer guidance on the benefits of HSAs and FSAs, assessing whether they suit your circumstances and helping you allocate pre-tax dollars for healthcare expenses to lower taxable income.

  • Overlooking Education Savings Plans —

    Ignoring options like 529 college savings plans can lead to missed tax benefits when saving for a child’s education.

    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

    Withholding too much or too little tax from your paycheck often leads to surprises at tax time, like large refunds or owing taxes.

    How Correct Capital Helps: Our team helps you adjust your W-4 form to achieve accurate withholding, enhancing cash flow and preventing unexpected tax bills.

  • Missing Opportunities for Charitable Contributions —

    Not properly documenting charitable donations can lead to missed tax deductions.

    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 Sunnyvale, CA Business Owners

Business owners in Sunnyvale, CA can benefit from effective tax planning to retain more money within their business. Here are some factors to consider for tax planning in your Sunnyvale, CA business:

  • Review the Structure of Your Business —

    The structure of your business impacts tax planning and should be carefully considered. Whether you choose an LLC, sole proprietorship, partnership, or S or C corporation, your tax obligations for both the business and yourself will be impacted.

  • Review the Retirement Plans You Offer Employees —

    Providing retirement plans such as 401(k)s, 403(b)s, or other defined contribution plans is an effective way to reduce tax liability. The 2019 "SECURE" Act introduced new retirement plan rules, so consulting a financial advisor about their tax implications may be beneficial.

    If you’re a high-earning business owner with high-income employees, a Cash Balance Pension Plan could be advantageous, though it requires large contributions.

  • 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. Having your spouse on the payroll can let you double the amount you contribute to retirement.

  • Use a Company Vehicle —

    Depending on your business activities in Sunnyvale, CA, 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:

    • Use the standard mileage rate to deduct 67 cents per mile (applicable for both gas and electric vehicles); or
    • Track your actual expenses, such as maintenance, registration fees, and fuel, to determine if this amount exceeds the standard mileage rate deduction.
  • Consider Fringe Benefits For Your Employees —

    Increasing wages for employees can drive up employment tax expenses. 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 —

    When some deductions are unavailable this year, they may be eligible for carryover into future years. Examples of carryover deductions include home office expenses, net operating losses, business credits, and capital losses.

Tax laws for businesses are constantly evolving. One advantage of working with a professional Sunnyvale, CA tax planner is that they will collaborate with you and your tax professional to find ways to improve long-term financial success.

Common Tax Planning Mistakes for Sunnyvale, CA Businesses

Effective tax planning allows businesses of all sizes to reduce tax liabilities and increase profitability. Unfortunately, common tax mistakes can cause businesses to pay more, miss deductions, and risk 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. Small businesses, freelancers, and companies with fluctuating income are particularly susceptible to this.

    How Correct Capital Helps: We provide support in calculating and scheduling estimated taxes so you meet IRS requirements and avoid penalties.

  • Neglecting Retirement Plan Contributions for Owners and Employees —

    Retirement plan contributions are often underused by businesses to reduce taxable income. Plans like 401(k)s, SEP IRAs, and Solo 401(k)s can provide substantial tax benefits for both owners and employees.

    How Correct Capital Helps: We assist businesses in establishing retirement plans that cut taxes and appeal to prospective and current 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: 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. 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. Our approach involves identifying the purpose of the funds and applying estate planning strategies, which consider beneficiaries and minimize taxes.

Tax Planning| Retirement Planners | Financial Advisor Near Me

Tax Planning in Sunnyvale, CA | Correct Capital Wealth Management

Correct Capital’s financial advisors and tax planners in Sunnyvale, CA recognize the importance of financial well-being for your family or business, today and into the future. To uphold your trust, we commit to the fiduciary standard and our I.O.U. promise—all advice is independent, objective, and unbiased. With tax laws constantly evolving, it’s essential to have a strong team in place, including your Sunnyvale, CA financial advisor, tax professional, and attorney. For support with tax planning, retirement planning, or any other financial concerns in Sunnyvale, CA, contact Correct Capital at 877-930-4015 or reach out online.


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