| If you are self-employed and you are making money - | | | | though you technically cannot touch it until you are of |
| you need to consider the obvious benefits of tax | | | | retirement age. However, there are situations when |
| planning strategies. Period! It does not matter whether | | | | you can tap into this money and not get penalized |
| you are a sole proprietor, a partner in a partnership or | | | | --although tax would most likely be due on the |
| a shareholder in an S Corporation. If you are | | | | distributions. However, that is a subject for another |
| successful in your business venture and have a | | | | article. |
| positive cash flow - you need tax planning. | | | | Getting the maximum benefit from expense |
| Our tax system is a pay-as-you-go system. The | | | | deductibility requires you to keep detailed records |
| taxing authorities (the IRS & your state tax | | | | receipts of deductible expenses. If your itemized |
| commission/department of revenue) expect to receive | | | | deductions are greater than the standard deduction - |
| your estimated tax payments evenly throughout the | | | | you will take the larger of the two. Expenses such as: |
| year on income you are earning. The purpose for tax | | | | mortgage interest, property taxes, charitable |
| planning is to mitigate any taxes due when it is time to | | | | contributions, personal property taxes, tax preparation |
| file your tax returns. Some strategies to reduce taxes | | | | fees, un-reimbursed job related expenses and |
| include: reducing your income, increasing your | | | | investment expenses are all accounted for in the |
| expenses and taking advantage of applicable tax | | | | itemized deduction calculation. This also directly |
| credits. | | | | reduces the taxable income figure on your tax return - |
| One of the easiest ways to reduce your income on | | | | and lowers your tax bill. There are also certain tax |
| your individual tax return would be to contribute to a | | | | credits that will also help reduce your tax if they are |
| retirement plan. Whether you put the maximum into an | | | | applicable to your situation. A few that come to mind |
| IRA, 401k, SEP or other type of retirement plan, these | | | | are: the earned income credit, education related tax |
| dollars reduce your taxable income and lower your tax | | | | credits, the adoption tax credit, the credit for children, |
| bill. You get to keep more of your money - even | | | | and others. |