Once the last minute rush of filing your taxes is over, the very first step that should be taken is to ensure that you review your tax return and use it as a road map for next years tax planning.
New rules are being issued and old ones changed by the IRS at an alarming speed.
In order to keep up to date and enjoy some tax relief, your last return is always the place to start with your new return.
There is some good news, however, and it is pleasing to note that individual tax rates in the US are at the lowest they have been in many years.
This makes income shifting a very important strategy.
If you believe that perhaps, in the following tax year, your income may fall into a lower tax bracket, in order to have some tax relief, you might want to decide to defer the receipt of income and accelerate deductions; or, vice versa, if you believe that your earnings in the next tax year will be higher.
Sounds complicated? Take some professional advice! Your income level obviously plays the leading role in determining your tax rate.
If big changes take place between now and the next tax year, for instance, divorce, cash windfalls, retirement or unemployment, these can have a dramatic influence on your tax liability.
In order to gain the best tax relief for these events, tax planning is essential.
Many of these events are unforeseen; but, if you know that an event is likely to happen, planning is a must for tax relief to offset losses or gains in any future tax outcomes.