A very important aspect of tax planning is to lower your tax liability as much as possible. When it comes to income tax planning, Marietta GA residents can rely on professional tax preparation and planning service providers to help develop a tax plan that achieves the important goal of reducing tax liability in the following ways.
Deductions
Developing a tax strategy which utilizes deductions effectively can reduce your tax liability significantly. Some people may not be aware of how businesses can utilize tax deductions on a consistent basis. Itemizing deductions is a very helpful practice for businesses and individuals as well. Individuals can deduct many items, such as charitable gifts, interest on a mortgage, vehicle registration fees, and healthcare expenses. Keeping track of receipts is also an important practice when it comes to deductions. You may be surprised what might be eligible as a deduction in a certain calendar year.
Retirement Plans
By adding money to a retirement plan such as a 401(k), your adjusted gross income (AGI) is reduced, which means your tax liability is reduced.
Tax Credits
Another way to reduce your tax liability is through income tax planning with tax credits. There are different types of tax credits, many of which you likely will not be eligible to claim. However, even if you can claim a few, you can reduce your tax liability to a significant degree. Some of the credits available include credits for home renovations, college tax credits, and credits for child adoption. The earned income credit is the most common type of tax credit. By utilizing these credits, you can reduce the amount of taxes you owe to the government.
Adjust Withholding
Another method for reducing the taxes you owe at tax time is by increasing the withholding amount from your wages. As you increase the amount taken out of your pay, you reduce your tax liability at tax time. In fact, you may receive a refund or larger refund on your income tax as a result. Of course, When you adjust your withholding in this manner, you are still paying the tax you owe, but it is more spread out throughout the year.
If you need help with tax planning in the Marietta, GA area, contact an experienced tax specialist today.
