Taxes can be confusing, especially when you’re going through a life change, such as a career shift, marriage or separation, moving to a new state, or starting a new business. In this blog, we’ll give you the top five things you need to know about tax shelters and how they can help you.
- Tax Shelters Help You Save Money When It’s Time To File
Finding a definition to what exactly a tax shelter is can be tricky. Different people in different industries will often have slightly varied definitions. Tax shelters range from investments to investment accounts that lead to fiscal savings during the tax season.They can also serve to lower your taxable income through credits and deductions. Investing in a tax shelter can help you save money, for example, let’s say you invest $100 into an investment and at the end of the year you save $400. The monetary saving benefits have outweighed the initial finanical investment. Other examples of tax shelters include 401(k) retirement plans and municipal bonds. Essentially, tax shelters include all strategies for lowering your tax payments at the end of the year. - Retirement Accounts Are One Of The Least Complicated Tax Shelters
If you’re deciding which tax shelter to place your money into, start with a retirement account. If you’re someone with a median tax bracket, meaning you don’t make millions of dollars, it allows you to place money into 401(k)s, 403(b)s as well as IRAs which stands for Individual Retirement Accounts. It is important to note that once you retire ,your accounts will then be taxed. If you’re someone just starting an account, it’s still worth your while to use these tax shelters. For other Americans who plan to be in a higher tax bracket when they retire, Roth IRA and Roth 401(k) are the tax shelters to choose from. This allows the money to be taxed before it enters the accounts. - If You Own a Small Business, There Are Tax Shelters Available to Reduce Your Taxable Income.
One of the benefits of having a small business is the ability to reduce your taxable income at the end of the year. There are both legal and illegal tax shelters, so sticking with a tax preparation business that knows about small business taxes is important. Another option is to stick with the tax shelters that the U.S. Government provides to be sure you are within legal guidelines. A few common business expenses include a home office, business vehicle, travel expenses and charitable donations. You can also take advantage of business investments, such as investing in your own businesses or invest in other businesses, such as joint partnerships/ventures. - Tax Shelters Can Get You Into Trouble If You Don’t Have The Right Information
Tax shelters are no doubt complicated and many people can get themselves into hot water if they don’t have all the information. Tax shelters are NOT the same as tax evasions. Tax avoidance and tax havens are legal ways to minimize your tax dues. This is minimizing your taxable income, rather than illegally concealing funds from tax authorities. Tax evasion is an illegal scheme to get out of paying taxes, it can lead to fines and jail time. - The Easiest Way To Find Out What Tax Shelters Will Benefit You Is Through a Tax Assessment
A tax assessment is the determination of the value and property of your assets. It can be nearly impossible to find all your options without the help of a seasoned tax professional. TakeAway Tax will help you assess all your tax options for federal, state, and local levels. As an added service to our clients, we are offering advisement and pre-planning services at the halfway mark in the year to ensure you, our client, have a game plan that allows you to reach your financial goals and annual expectations. With Takeaway Tax, it’s easy to upload your W-2s or 1099s and schedule an assessment with a tax pro that knows how to save you money on your taxes. It doesn’t have to be hard to save yourself money on your taxes, we can help! Learn more about us at www.takeawaytax.com.