Income Tax Planning [4 Strategies]

Income Tax Planning [4 Strategies]

4 Successful Income Tax Planning Strategies for Individuals

Income tax planning is an effective strategy for reducing taxes and having more money to spend or save. If you’re looking for advice on the best strategies to use, Tobin & Collins is here to help. Let’s look at four income tax planning strategies you can use.

1. Buy a Municipal Bond

If you invest more in municipal bonds, you’d be essentially lending money to the government. For financing, you get some form of predetermined payment from the government as interest, and you also get the total amount of your original investment.

This is beneficial because the interest on municipal bonds is not subject to taxes. Municipal bonds are pretty attractive to investors even at the state and local levels. These bonds have lower interest and default rates, but the benefits obtained are worth it.

2. Long Term Capital Gains

Don’t underestimate the power and financial success investing brings. If you want to grow your wealth, invest in stocks, real estate, or any form of long-term capital investment.

For example, suppose an investor holds an asset for an extended period, particularly over a year. In that case, they tend to get preferable tax rates compared to the ordinary tax rates when you hold a capital investment for more than one year.

3. Start a Business

Have you ever dreamed of starting your own business and becoming a boss? If the answer is yes, then why not give it a try? Having a side business has a lot of added financial benefits, including reducing tax liabilities. Following IRS guidelines, you can also add some of your home expenses to the home business office deduction.

4. Use a Retirement Account

Having a retirement account is an excellent way to reduce your tax bill and make you qualified for different kinds of tax breaks. This account is perfect for income tax planning because you might not have to pay income tax on your savings, depending on the retirement account.

Plan Your Taxes with the Best Tax Accountants in NJ

Tobin and Collins can help you create an effective tax planning strategy. Our tax consultants are ready and able to assist you. Contact us today!

Tobin & Collins