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Reduce Your Taxes

Posted on: May 4th, 2016 by consultingsrvs No Comments

Reduce Your Taxes

Reduce Your Taxes

The objective of tax planning is to arrange your financial affairs so as to minimize your taxes. These three basic methods can reduce your taxes, and each method might have several variations. It is possible to reduce income, increase deductions, while taking advantage of tax credits.
Reducing Income
A key element in determining taxes is the Adjusted Gross Income or (AGI). There are many things which depend on your AGI (or modifications to your AGI), your tax rate being one of them. AGI even impacts your financial life outside of taxes: banks, mortgage lenders, and college financial aid programs ask for your adjusted gross income, a key indicator of your finances.
Because of the importance of the adjusted gross income, you may want to begin your tax planning here. What goes into your adjusted gross income? AGI is income from all sources minus any adjustments. Remember, the higher the total income the higher the adjusted gross income.
As you can guess, the more money you make, the greater the tax liability. Conversely, the less money you make, the lower the tax liability. The best way to reduce taxes is to lower your taxable income. And the best way to lower your taxable income is to contribute money to a 401(k) or similar retirement plan. Your contribution reduces your taxable wages, and lowers your tax bill.
You may be able to reduce your Adjusted Gross Income through various adjustments to income. An Adjustment to your income is a deduction; however, you don’t have to itemize them. Instead, you take them on page 1 of your 1040 and they will reduce your Adjusted Gross Income. Adjustments include things such as a contribution an IRA, student loan interest paid, alimony paid, or classroom related expenses. A list of all qualified adjustments can be found on Form 1040.

The best ways to boost your adjustments is to contribute to a traditional IRA, either through a 401(k) at work or through a traditional IRA plan. Contributions to these plans can reduce both your taxable income, as well as, your taxes
Increase Your Tax Deductions
Taxable income is a key factor in determining your overall tax liability. After you have reduced your AGI, taxable income is the result. Most filers can take a standard deduction, and some people are able to itemize their deductions.
Itemized deductions include expenses for items such as health care, state and local taxes, property taxes, mortgage interest, gifts to charity. A key tax planning strategy is to keep track of itemized expenses throughout the entire year. Your standard deduction and personal exemptions depends on your filing status and the number of dependents you have.

The best strategies for reducing your taxable income are to itemize your deductions. The three largest deductions are for mortgage interest, state taxes, and gifts to charity.
Take Advantage of Tax Credits
Now that we’ve fixed our taxable income, it is time to focus on tax credits. Tax credits will reduce your tax. There are tax credits for college expenses, saving for retirement, even adopting children.
The adoption of a child and college expenses provide the best tax credits are for. Most of us are not in a position to adopt a child, however, a lot of us could take some college classes. The Hope Credit is for students in their first two years of college, and The Lifetime Learning Credit are two education-related tax credits for anyone taking college classes. These classes do not have to be related to your career.
Avoid early withdrawals from your IRA or 401(k) retirement plan. The amount you withdraw will become part of your taxable income, and on top of that there will be additional taxes to pay on the early withdrawal.

A great tax credit and also the most abused is the Earned Income Credit (EIC). Unlike other tax credits benefits, the EIC is credited to your account as a payment, and that means EIC often results in a tax refund even, if the total tax has been reduced to zero. Filers may qualify for the earned income credit even if you earn less than a certain amount

.
Increase Your Withholding
Avoid owing money to the IRS at the end of the year by increasing your withholding. Increase the amount of money taken out of your paycheck throughout the year, so you’ll get a bigger refund when you file your taxes.
Consulting Services Tax & Accounting offers business and personal tax services, including tax services for late filer, non-filers, and for anyone who may have fallen behind in the payments of their tax obligations. Estate & Trusts tax preparation is also one of our specialties.
If you or your business has been audited and you require representation, you can rely on our expertise with the audits.
A full service agency, we offer in-house accounting or payroll services. Call today, and we will be happy to give you a free strategy session before we begin to work together.

Areas of Expertise

Non-filer & Delinquent filers

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Non-filer & Delinquent filers

At Consulting Services Tax & Accounting, we know that sometimes life can be complicated, and that can make doing your taxes even more difficult. Sometimes, things can just get away from you, and before you know it, one or more years have gone by. That's why we want to work with you, to make it easier to get caught up and current with your tax filing obligations.

Multistate filers

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Multi-State Filing

Sometimes in life you've got to move around. Your work life can take you to many different places, whether it's a short-term assignment, or a long-term move, this may mean that you will need to file a tax return for multiple states. Many smaller tax preparation firms lack either the expertise or the software to handle multi-state filings. With Consulting Services Tax & Accounting, you can count on us to get all of your tax problems under control, no matter what state filings may be involved.

Small Business

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Home-based Small Business Specialist

If you own a small business, you have enough on your mind just trying to handle your day-to-day affairs and help your business grow. Tax time often adds an even greater burden to the small business owner because the rules for deductibility, depreciation, and how to determine your taxable income can be confusing and time consuming. We want to make tax time easier for you, so you can get back to focusing of the running your business.

Corporate and LLC filing

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Corporate & LLC Guidance

Whether you've owned a small business for a while, or you want to start your new business with a plan for the future, the staff at Consulting Services Tax & Accounting is here to help. We can advise you on the best route to take whether it is the formation of an LLC, Partnership, S-Corp, or a C-Corp, and what the advantages and disadvantages are for each type of entity, so that you'll be prepared to make the best possible choice for your businesses future.

Why Choose Us?

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As a full service tax preparation firm, not only do we offer professional tax preparation we also offer in house accounting and payroll services. Call us today and we will be happy to set up an appointment for a free 30 minute consultation before we begin working together.

Trust us Year Round Service

Consulting Services Tax & Accounting is available and has regular office hours Monday thru Friday year-round to assist you with any and all tax, accounting and payroll issues that may arise.

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You can count on Consulting Services Tax & Accounting to provide you with high-quality services and expert advice that will put all of you tax time worries to rest.

Custom care We Are There for You

If you have a unique or difficult tax situation, we are always here to help you. We have seen many different tax scenarios in our 45+ years of service to the Madison area.

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