Reduce Your Tax Liability With Correct Capital's Financial Advisors in Town and Country, MO
Tax Planning in Town and Country, MO. Tax liability refers to how much taxes you will need to pay to local, state, and federal governments. While taxes may be one of the two certainties in life, The IRS allows for several ways you can reduce how much you owe. Tax planning is also important for successful retirement planning. At Correct Capital, we work with Town and Country, MO individuals, families, and businesses in the Town and Country, MO area to find creative and proven strategies for reducing their tax liability. Call Correct Capital's financial and fiduciary advisors today at 314-930-401(k), reach out through our website, or read on to see how prudent tax planning can benefit you.
Tax Planning for Town and Country, MO Individuals and Families
Prudent tax planning is essential for individuals and families who want to increase their retirement savings and have extra money for the short-term. Some things to take advantage of when tax planning in Town and Country, MO are:
- Standard Deduction vs. Itemizing —
The standard deduction is specific dollar figure that you can deduct from your taxable income. In 2022 and 2023, that flat-rate is:
- $12,950 for single filers
- $25,900 for married, filing jointly
- $12,950 for married, filing separately
- $19,400 for head of household
- $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 count up each deduction you're eligible for individually. The drawback is that filing will be more complicated, and you will have to document why you are eligible for the deduction when you send your returns.
- Review Your Retirement Accounts —
Roth IRAs and Traditional IRAs differ in how they affect your taxes. Contributions to 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 the money grows tax free. Your age, income, and other factors will determine what may be better for you for your tax planning. For instance, if you anticipate have more tax liability in the future, you can move money 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 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, plus an extra $6,500 if you're at least 50 years old. For 2023, you can deposit as much as $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 savings 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 have to pay 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. You can deduct up to $3,000 in capital gains losses per year, but additional losses can be carried over into future years.
- Consider Paying Next Year's Bills Now —
If you have unreimbursed medical expenses, 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 tuition to an undergraduate, graduate and professional degree courses for your or a child, as well as courses that improve your job skills for a Lifetime Learning Credit.
- If Married, Filing Jointly or Separately —
More than 9 out of 10 married couples file jointly. It's the only way to get certain tax credits and reductions. But, if both spouses earn considerable incomes, filing separately may reduce their combined tax liability. If one spouse has a lot of medical expenses, it may make sense to file separately to qualify for the 7.5% threshold for unreimbursed medical expenses.
- Make Charitable Donations —
You can deduct up to 60% of your adjusted gross income via charitable donations. Accepted organizations 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," under the condition that the funds are used for charity
- Cemetery organizations
- Any government entities, as long as 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 deposit 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 older than 70½, you can make what's known as a qualified charitable distribution by transferring no more than $100,000 a year from a traditional IRA directly to a non-profit organization tax-free. If you are 72 or older, that donation counts as your required minimum distribution.
When you consult with an experienced financial planner for your tax planning in Town and Country, MO|With the help a financial planner in Town and Country, MO, they can help put more money in your pocket now while also setting you up for a financially secure future.
Tax Planning for Town and Country, MO Business Owners
With diligent tax planning, business owners can keep as much of their profits as possible. Ways to owe less in taxes when tax planning for your Town and Country, MO business include:
- Evaluate How Your Business Is Structured —
A lot goes into the structure of a business, and tax planning should be considered. Structuring your business as an LLC, sole proprietorship, partnership, or S or C corporation will have consequences for how much you pay in taxes both as a business and personally.
- Assess Your Employees' Employer-Sponsored Retirement Plans —
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 may be best to consult a financial advisor in Town and Country, MO about how those changes affect your tax planning.
a good idea if you and your employees are both higher-earning. While you would need to significant amounts of money per year, the tax saving can be significant.
- Consider Other Benefits For Your Employees —
Only offering raises can result in higher taxes for you. See if your employees would be open to fringe benefits as part of their compensation, instead of just giving them a higher paycheck. Examples that could help reduce your tax liability are medical insurance, group life insurance, help with childcare expenses, transportation reimbursement, meals, family or medical leave, or continuing education reimbursement.
You can also set up accountable plans to pay employees back for certain expenses like travel, meals, or entertainment without counting the reimbursement as income.
- Have Your Family Work For The Business —
Your kids can work for you tax-free on income up to $12,000, and you can help them start saving for retirement through an account 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 —
Depending on the nature of your business, you and your employees may be able to use a company vehicle and subtract transportation expenses 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 the first 6 months of 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 whether those allow you to deduct more than the standard mileage rate would have
- Consider Tax Loss Carryover —
You're allowed to carryover some deductions into another year. These can include a home office deduction, net operating losses, business credits, and capital losses.
Tax laws for businesses are always in flux. One benefit of working with a knowledgeable Town and Country, 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 personal and business financial success.
Other services we offer in Town and Country, MO include:
- Small Business Retirement Plans
- Social Security Consultants Near Me
- Retirement Calculator
- Retirement Planning
- Rollover 401(k)
- Wealth Management
- 401k Companies
- Financial Advisor
- Asset Management
Tax Planning in Town and Country, MO | Correct Capital Wealth Management
At Correct Capital, our Town and Country, 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; all the advice we give you will be independent, objective, and unbiased. With tax law always changing, it's important to put a team around you that will help, like your Town and Country, MO financial advisor, tax preparer, and attorney. For help with tax planning, retirement planning, or any other financial needs in Town and Country, MO, call Correct Capital today at 314-930-401(k) or contact us online.