Examples of Tax Planning That Are Simple and Often Used in Tax Filing
Nobody likes paying taxes. One way to pay less tax is to earn less money, though that isn’t fun either. Fortunately, a better strategy is to engage in tax planning in Madison, WI, which will both reduce and delay your taxes. Check out these examples of tax planning that you should study.
Working From Home Isn’t Just Fun – It Can Save You Money
It seems as if most people would rather work from home than be required to commute to their employer’s formal place of work. Whether you can work from home just some or even all of the time, you can report home office expenses that can be deducted from your taxable income. If you have a choice between the two, work from home more often so you can deduct things like home maintenance, utility bills, rent, mortgage, and property taxes on your personal tax return.
Own Many Investments? Don’t Actively Trade Them
Many people own investments. If you hold them for at least a year before selling them, they’re taxed at 0%, 15% or 20%, which are lower brackets than regular income. Short-term holdings get taxed at regular, higher tax rates. A good strategy often exercised by professionals in tax planning in Madison, WI, is to never sell investments that have earned money and been held for less than one year.
Retirement Accounts Work Wonders
Individual retirement accounts (IRA) often don’t earn as much interest as well-placed investments not placed in IRAs. However, IRAs aren’t taxed until money is removed from them. If you put this off until retirement – you’ll be penalized if you don’t do this – you will get taxed at a lower marginal rate, considering that most retired folks earn a lot less than when they were working full-time. We’re full of great strategies for tax planning in Madison, WI, here at KMA Bodilly. “Don’t sweat the stressors of tax season” – that’s our motto here at KMA Bodilly, where we work tirelessly for you.