Tax planning can help minimize tax liability from "summary" of Income Tax Fundamentals 2021 by Gerald E. Whittenburg,Martha Altus-Buller,Steven Gill
Effective tax planning is a crucial aspect of managing one's finances and ensuring that tax liability is kept to a minimum. By strategically analyzing one's financial situation and making informed decisions, individuals can optimize their tax situation and potentially save a significant amount of money. Tax planning involves various strategies and techniques that can be used to reduce taxable income, take advantage of tax deductions and credits, and defer taxes to future years. For example, individuals can contribute to retirement accounts such as IRAs or 401(k) plans to lower their taxable income and save for the future. Furthermore, timing can play a key role in tax planning. By strategically timing income and deductions, individuals can potentially reduce their tax liability. For instance, individuals may choose to defer receiving certain income until the following year or accelerate deductions into the current year to maximize tax savings. Additionally, tax planning can also involve taking advantage of tax credits and deductions that are available to taxpayers. By carefully reviewing eligible expenses and credits, individuals can reduce their taxable income and potentially receive a larger tax refund.- Tax planning is a proactive approach to managing one's tax situation and ensuring that one's financial goals are met efficiently. By implementing effective tax planning strategies, individuals can minimize their tax liability and keep more of their hard-earned money in their pockets.
