Tax Minimization Strategies

No one likes paying taxes, but with expert tax planning services, there are ways to minimize your tax bill without breaking the law. At Abacus, our tax planning experts understand the complexities of the tax code and can help you navigate it to your advantage. We utilize a variety of tax minimization strategies, such as income deferral, income splitting, tax credits and others, to help you reduce your tax burden. 

Our goal is to help you keep more of your hard-earned money in your pocket. By carefully balancing these tax planning strategies, we can help you achieve significant tax savings over time. At Abacus, we are committed to providing personalized tax planning services that are tailored to your unique situation, so you can be confident that you are making the most of your money.

Tax planning is an essential part of financial planning, and it offers a unique advantage in that it can help reduce taxes throughout the year, not just at year-end. 

At its core, tax planning is about taking advantage of available tax deductions, credits, and exemptions to minimize your tax burden. By engaging in proactive tax planning throughout the year, you can make smart financial decisions that will result in significant tax savings. 

The beauty of tax planning is that it is not a one-time event but rather an ongoing process that can lead to significant financial benefits over time. By working with a trusted tax professional and developing a personalized tax planning strategy, you can achieve your financial goals while minimizing your tax liability.

After reviewing your current situation and financial goals, we will pursue a combination of tax minimization strategies that might include:

The IRS does not tax the money you save in pension plans, retirement savings plans, and universal life insurance until you withdraw the money and use it as income when you are in a lower tax bracket. Likewise, you can defer capital gains to the following tax year to take advantage of a lower tax bracket.

You can use many methods to move some of your income to family members in a lower tax bracket. You can:

• Set up a retirement savings plan for a spouse who earns less than you
• Establish a college savings plan for your children
• Hire your spouse or children, or
• Split income among several family members or legal entities. (Several kinds of trusts also use income-splitting strategies.)

Income spreading shifts taxable income, like severance pay or capital gains, from one year to another to take advantage of a lower tax rate. You can also delay business or commission income in this way.

You can move income to specialized tax shelters to take advantage of lower tax rates for capital gains, dividends and interest income.

Tax credit planning ensures you take full advantage of the tax credits that are available to you, including Flexible Spending Accounts for dependent care and medical and dental insurance and charitable donations or philanthropic giving.

During tax planning, we also look at tax minimization investments, another smart way to shield income from taxes. With Abacus’s Investment tax planning, our team looks at the best way to position assets to minimize your taxes. We provide advice to you on an ongoing basis. Certain types of investments can reduce your tax bill while growing your wealth, a strategy that can be a valuable win-win for you.

Because many of our clients invest in mutual funds, the subject of tax minimization investments becomes even more important. Did you know that from 2002 through 2012, the actual return to investors in the average stock mutual fund shrank by eight-tenths of a percentage point on an annualized basis due to taxable distributions? That’s an incredible loss!

Tax policies hit the taxable bond funds even harder: Taxes amounted to 1.8 percentage points, annualized, during that period, which adds up to more than 20 per cent of the annualized return for those funds.

With the top income tax rate now at 39.6 percent and the top long-term capital gains rate at 20 percent, it becomes apparent that tax minimization strategies for your investments are more important than ever.

Abacus’s team will look at different tax minimization investments that fit your needs, including:

• Individual retirement accounts (IRAs): IRAs can be opened by anyone regardless of income; your money will grow tax-deferred
• Roth IRAs: Your money also grows tax-deferred, and withdrawals during retirement are tax-free
• Actively managed mutual funds: We’ll look for those that deliver superior returns after taxes
• Municipal bonds: Their interest is not part of the calculation for net investment income, which is helpful if your income is well above the appropriate modified adjusted gross income threshold

Every company needs a tax strategy that can easily adapt as it grows and evolves. You need a tax team that not only stays up-to-date on new tax laws and legislation at the federal, state and local levels but also takes a proactive approach to corporate tax minimization so you can stay one step ahead.

Abacus's arsenal of corporate tax minimization strategies will maximize your tax savings so you can make the most of your resources, grow your business, make decisions faster, and maintain your competitive advantage. They include:

• Corporate tax planning to realize savings year-round
• Income deferral strategies
• Tax credit identification, such as alternative energy
• Capital depreciation
• Business structure, both domestic and international
• Mergers and acquisitions
• Real estate tax planning
• Sales and use tax
• Franchise tax planning
• Multi-state tax studies
• Worn out inventory write-offs
• Inventory and auto expense deductions
• Business-related education deductions
• Bad debt deductions
• Reasonable and appropriate business entertainment and travel deductions

Are you also interested in CPA tax preparation services? We’ve got you covered!