Many US citizens are concerned about taxes, retirement, and financial health just because they don’t have a meaningful tax planning strategy, which would provide them many benefits and peace of mind. Whether you want to plan inheritance tax or capital gains, when it comes to dealing with significant amounts of money, it’s always wise to have tax planning strategy ahead.
In this article, we’ll discuss how a tax professional can be a huge asset, how tax-related planning contributes to wealth building, and what is happening right now in 2021.
Taxes are Stressful – Hiring a Tax Pro Give You Peace of Mind.
Most people don’t cut their own hair themselves, but they hire a professional to help them look their best. A great cut makes you feel great and helps you feel confident in daily life. The same situation is regarding hiring a professional tax advisor since they help you get your fiscal tax house in order so you can feel secure and stress-free each tax season.
Hiring a Tax Pro in 2021 for 2022 is a wise decision, especially because taxation laws are complex and constantly changing, and the average person hardly can understand all the specific opportunities and tax regulations. The pandemic put pressure on many businesses, families, and individuals, and the government reacted with creation of special supporting programs to help people. However, if you don’t know the maze of the new tax codes, you may find yourself with unexpected tax surprises.
Krishnan and Associates specializes in tax resolution, business tax success, and personal tax success. We make sure our clients feel the freedom knowing they have the best strategy for their personal life and business.
Tax Planning is a Core Component of the Fiscal Freedom
Unfortunately, many people approach taxes with avoidance. The absence of a tax plan often results in paying too much or too little year after year. Each year is different can have a significant effect on what you owe and what you can save. Big life events, such as l getting married, divorced, moving, deaths, and, births can massively impact the money you can keep and the money for taxes.
Planning a tax strategy is necessary for people who want to be financially free, build a retirement, and provide their family with financial security.
A proper tax plan allows you to get ahead and make productive decisions to build your personal finances, take advantage of tax-efficient accounts, reduce overall taxable income, make a smarter investment that avoids capital gains and effectively offset losses and gains.
What’s Happening in Taxes Now and in 2022 Tax Year
This year and 2022 are especially complicated because of all the tax changes as a result of COVID 19. We have seen the government spending trillions of dollars to fight COVID, and the government budget is not a well without a bottom.
We have two major things in play the stimulus package and the new bill in congress that deals with the government infrastructure and debt. This means they are passing legislation that will absolutely affect everyone. Although we don’t know exactly what they will be, taxes will likely be higher in your lifetime than at this moment.
American Rescue Plan
The CARES Act established the SBA Paycheck Protection Program (PPP), which certainly increases IRS enforcement. Everyone needs to make sure they know all the fine details to take care of business and not get caught with unexpected IRS notices.
Child Tax Credit
The ‘20 an’ 21 child tax credit allows you to take full payment upfront or opt-out and take the entire credit on your next tax return. How you use it depends on each individual’s situation. Planning it out ahead of time helps define which makes more sense.
Capital Gains
If you are selling property, stocks, or cryptocurrency, and you have made or foresee a significant profit, don’t count it too quickly because the government wants its share. It is important to note that there are strategies that can help you reduce your tax burden. Right now, they have a 20% maximum in capital gains. This could change with a vote. The point is that your business and investments are there to make you money, not make the government money. Capital gains is a tax that needs a plan.
Qualified Business Income Deduction
Depending on your business situation, you may or may not qualify for the qualified business income deduction. It all depends on your growth and knowing how to allocate funds. It may mean exploring strategies like gifting money to family. In 2020 and 2021, you could gift up to $15,000, and your family member doesn’t have to pay taxes on the money or deal with IRS. What will happen in 2022? Getting caught off guard is the worst scenario, and that’s why we suggest a strategic eight-month planning process.
Summary
Most people only think of the Federal taxes, but planning for state taxes is of equal importance – with new tax laws, life, and the pandemic – planning is more critical than ever. Working with a seasoned CPA is just smart.
The best strategy remains to focus on your long-term goals while retaining sufficient flexibility to accommodate the uncertain policy landscape.
It not only helps in you achieve success in your personal and business world- it relieves tax worry. The last couple of years have put everyone on edge. We want to do our part in helping you achieve freedom by helping you optimize tax benefits and a reduction of tax liabilities.
If you’ve been feeling lost and unsure how to approach your taxes, we will be glad to help. You can explain your financial situation and long-term goals to our tax advisors, who will offer tailored strategies to maximize your income potential. Schedule a free discovery call and we’ll talk about where you are and how to get you on the right path.
Resources:
https://www.advantageccs.org/blog/do-you-really-need-to-hire-a-tax-professional/
https://www.mayoclinic.org/5-ways-to-stop-an-anxiety-spiral/art-20474268
https://docs.google.com/document/d/1I94HZjwc7xZuNOzb0hEQV3ACNx-XrGw5/edit
