Tax Planning in Westwood, MO

Tax PlanningReduce Your Tax Liability With Correct Capital's Financial Advisors in Westwood, MO

Tax Planning in Westwood, MO. Tax liability refers to how much taxes you pay each year to local, state, and federal entities. Even though taxes may be one of the two certainties in life, there are perfectly legal ways you can reduce how much you owe. Tax planning is also important to planning the golden years of your dreams. At Correct Capital, we work with local Westwood, MO individuals, families, and businesses to find creative and proven strategies for reducing their tax liability. Speak to Correct Capital's financial and fiduciary advisors today at 877-930-4015, contact us online, or read the article below to see how prudent tax planning can keep more money in your account both now and down the road.

Tax Planning for Westwood, MO Individuals and Families

Smart tax planning is essential for individuals and families who want to put more in their retirement accounts and afford them more money for both now and the near future. Some things to consider when tax planning in Westwood, MO are:

• Standard Deduction vs. Itemizing —

  The standard deduction is flat figure that you can deduct from your taxable income. In 2022 and 2023, that flat-rate is:

  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 your deductible income is more than the above, you can count up each deduction you're eligible for individually. The downside is that filing will be more complicated, and you have to prove each deduction.

• Review How You Are Saving For Retirement —

  Roth IRAs and Traditional IRAs both offer tax benefits in different ways. Contributions to a traditional IRA may be fully or partially deductible, and the money is not taxed until you withdraw it. Roth IRA contributions are not deductible, but the money grows tax free. Your unique situation will determine what may be better for you in terms of tax planning. For instance, if you expect your taxes to go up in the future, you can convert money from a traditional IRA to a Roth IRA to pay taxes on the transfer, while allowing the money to grow tax-free.

  If you contribute to 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 contribute up to $20,500 to a 401(k) in 2022, or as much as $27,000 if you're 50 or older. For 2023, you can contribute as much as $22,500 or $30,000.

  If you're have freelance income, you can open up an individual retirement plan, like 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 often higher than long-term. The maximum deductible amount is $3,000 per year, but you may be able to deduct higher losses in future years.

• Consider Paying Next Year's Bills Now —

  If you have medical expenses your insurance didn't cover, you can write off those that are greater than 7.5% of your adjusted gross income. Paying property taxes early can also lead to deductions, and you can pay tuition to an undergraduate, graduate and professional degree courses for your or a child, as well as courses that improve your job skills in order to qualify for a Lifetime Learning Credit.

• If Married, Filing Jointly or Separately —

  The IRS says that roughly 95% of married couples choose to file joint tax returns. 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 meet the 7.5% threshold for medical deductions.

• Donate to Charity —

  You can deduct up to 60% of your adjusted gross income when donating to certain organizations. Accepted charities are:

  • 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 companies
  • Any U.S. federal, state, local, or Native governments and subdivisions, as long as the funds are for public use
  • In many cases, a Canadian, Mexican, or Israeli organization, under the condition that the organization meets the criteria for a charity under United States law

  If you open a Donor-Advised Fund, you can deduct a bulk amount now, while still being able to wait to decide how the funds will get distributed down the road.

  If you are at least 70½ years old, you can make what's called a qualified charitable distribution by transferring up to $100,000 a year from a traditional IRA directly to a charity tax-free. If you are 72 or older, that transfer counts as your required minimum distribution.

When you use a knowledgeable financial adviser for your tax planning in Westwood, MO|With the help a financial planner in Westwood, MO, they can help put more money in your pocket now while also setting you up for a financially secure future.

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Tax Planning for Westwood, MO Business Owners

With diligent tax planning, business owners can keep as much of their profits as possible. Some things to consider when tax planning for your Westwood, MO business include:

• Assess How Your Business Is Structured —

  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 have consequences for both your corporate and your individual tax rate.

• Assess Your Employees' Employer-Sponsored Retirement Plans —

  Offering retirement plans not only attracts and retains talent, but it also allows you to deduct contributions. The "SECURE" Act of 2019 changed rules for creating and maintaining retirement plans for both small and large employers, so it's likely in your best interest to consult a financial advisor in Westwood, 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 an employer must contribute several hundred thousand dollars per year, the tax benefits are high.

• Consider Fringe Benefits For Your Employees —

  Increasing your employees' wages can lead to higher taxes for you. See if your employees would be open to other benefits rather than just giving them a raise. Examples that could help reduce your tax liability are medical insurance, group life insurance, help with childcare expenses, transportation reimbursement, meals, more paid time off, or paying for career-boosting courses.

  You can also use accountable plans to pay employees back for business expenses without having to report them as employee income.

• Have Your Family Work For The Business —

  If you hire your children, they do not have to pay taxes on their first $12,000 in income, and you can help kick-start their retirement savings through an account such as a ROTH IRA. You can double how much you're allowed to put into retirement plans by having your spouse work for the business.

• Use a Company Vehicle —

  If you and your employees need to drive as part of the normal course of your business, you can subtract transportation expenses from your taxable profits. There are two different means of deducting those expenses:

  • Use the standard mileage rate to deduct 58.5 cents per mile (for January to June in 2022) or 62.5 cents per mile (for July to December in 2022); or
  • Keep a record of your actual expenses, like maintenance, registration fees, and gas, and determine whether those allow you to deduct more than the standard mileage rate would have
• Look into 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 in flux. A key benefit of consulting with a knowledgeable Westwood, MO tax planner is that they will work with you and the person who prepares your taxes to determine if there are ways to strengthen your personal and business financial success.

Other services we offer in Westwood, MO include:

• Succession Planning
• Fiduciary Financial Advisor
• Company 401(k) Plans
• ESOP Advisor
• Self-Employed Retirement Plans
• 401(k) For Small Business

Tax Planning in Westwood, MO | Correct Capital Wealth Management

At Correct Capital, our Westwood, MO financial advisors know strong financial health is key to your overall success. That is why we hold ourselves to the fiduciary standard: we are legally and ethically bound to act in your best interest. With tax law always changing, it's important to put a team around you that will help, like your Westwood, MO financial advisor, tax preparer, and attorney. For help with tax planning, asset management, or any other financial needs in Westwood, MO, call Correct Capital today at 877-930-4015 or contact us online.

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