Tax planning is essentially tracking your income tax deductible items as they come up, and keeping records organized and handy in case they are needed. The most important tool for tax planning is a small filing cabinet. You can use this filing cabinet to file your tax planning documents and receipts, as well as keep track of previous tax returns filed and other important documents such as birth certificates and social security cards. The file cabinet you get to use for your tax planning should be fire proof and have a lock. That way your tax planning documents are safe in almost any disaster, and other people cannot easily gain access to your tax planning and other important documents.

Part of tax planning is making sure that you are aware of what expenses are tax deductible. You cannot engage in tax planning and track tax deductible expenses if you don’t know what you should be tracking! The Internal Revenue Service offers many publications on this subject. However, if you have any questions about income tax deductible items you should contact a qualified, certified, and licensed tax professional.

Once you know what tax deductible expenses you will need to track for the coming tax year, you need to set up tax planning record keeping system. This can be a simple receipt book, expanding file, index cards, envelopes, or any other method that makes sense to you. Keep in mind, however, as you engage in tax planning, that your tax planning record keeping system should not only make sense to you, but also make sense to your income tax preparer and the Internal Revenue Service if necessary.

At the end of each month, you can add up the totals for the different types of income tax deductible expenses you recorded in your tax planning records for that month. This way, all you have to do to discover your tax deductible amount is add up the totals for each month. The other records you collect and track through your tax planning are simply for proof that you can claim these income tax deductions, and are not really needed for preparing your income tax return if you have all of your totals in order.

On the surface, income tax planning may seem complicated and difficult. But with proper organization, tax planning is really quite easy. Not only that, but when you engage in income tax planning, you better your chances for that larger income tax refund that you need and deserve. If you have any questions about tax planning, you should contact a tax planning professional tax accountant today!

Many people do not think ahead about reducing taxes during their retirement years. But actually there are many ways to reduce the amount of taxes that you pay during your retirement years. Some of these include.
Maximizing the nontaxable amount of your retirement plan benefits by taking a lump sum distribution limited to your previous contributions. Planning the order and timing of (a) retirement plan rollovers and (b) IRA distributions to maximize the nontaxable amount.
Eliminating withholding tax on retirement plan distributions by making a trustee to trustee rollover to your IRA. Electing to defer tax on the distribution to you of your employer’s stocks and bonds. Carefully considering whether and when you should convert your regular IRA to a Roth IRA.
Planning the order and timing of (a) retirement plan rollovers and (b) Roth IRA conversions to maximize the nontaxable amount. Reversing your previous conversion of an IRA to a Roth IRA because of change circumstances. Obtaining temporary use of retirement or IRA funds without paying tax or interest on the funds.
Deferring or accelerate income or deductions between tax years to minimize tax on social security benefits. Choosing distribution alternatives that delay taxation of required minimum distributions from retirement plans and IRAs.
Taking a partial lump sum distribution from a personally purchased annuity or a funded nonqualified plan after the annuity has started, rather than before. Carefully consider whether your rollover of retirement plan funds to an IRA should include your previous contributions to the plan. Carefully considering whether to roll over your employer’s stocks and bonds to an IRA.
Electing the most favorable method for computing the tax on a lump sum distribution from your retirement plan, if you were born before January 1, 1936. Deferring income (or accelerate deductions) between tax years to qualify for a Roth IRA conversion.
Choosing the distribution methods and distribution periods for your retirement, IRA, an annuity benefits that maximize the deferral of your taxes. Taking the first required minimum distribution from your retirement plan or IRA in the tax year generating the lowest tax. Structuring distributions from your retirement plans or IRAs to avoid the penalty tax on premature distributions.
Electing the most favorable method for computing the tax on lump sum payments of prior year social security benefits. Determining the percentage of disability insurance premiums you paid a to maximize the nontaxable portion of your disability benefits. Qualifying for nontaxable VA disability benefits to replace taxable U.S. Military retired pay. Preserving your surviving spouses right to elect to own your IRA or Roth IRA.
Preserving the right of your beneficiaries to choose between alternative methods of distribution of your retirement and IRA benefits. Establishing separate IRA accounts for your beneficiaries to maximize their tax deferrals. Designating a trust as the beneficiary of your retirement or IRA benefits to provide better control of funds.
Devising an estate plan that reduces or eliminates federal estate taxes on your retirement or IRA benefits. Making a charitable beneficiary designation that will eliminate taxes on retirement or IRA benefits. Using multiple trusts as IRA beneficiaries to maximize tax deferral.