Top Tax Planning Strategies

Paying taxes is something we all must do simply because not doing so is against the law. The great Benjamin Franklin once said, "In this world, nothing can be said to be certain, except death and taxes." This might sound whimsical or ominous, but either way, it’s true. It doesn’t matter what we do for a living, we have to pay taxes. However, there are certain strategies that might help you to minimize your taxes. So, if you want to be in charge of your finances and save some money, these top tax planning strategies will help you do it.

Make a Smart Retirement Plan

One of the best ways to minimize taxes and save money is to have a good and smart retirement plan. This is not an easy thing to do or plan, and giving specific advice when it comes to planning retirement is not a simple task because all people have different jobs and unique private situations. However, there is one thing you can do to make this a bit easier—you can set yourself up with a self managed super fund. Most of these funds offer a tax-free pension as an income stream after retirement.

One of the best things about a self-managed super fund is that it gives you more flexibility than most superannuation structures when it comes to contributions, income, delegating earnings to certain members, and reserves.

This a good thing because it gives trustees the ability to use the flexibility of the fund to reduce the amount of overall tax. This is possible because this fund allows trustees to take people’s unique and private situation into account and then make decisions based on their contributions, reserves, and distributions. This gives you a certain feeling of safety because other trustees won’t make a decision at your expense.

Try Income Deferral

In case you didn’t know, the IRS does not tax the money you save in retirement plans, savings plans, and life insurance. However, this is only until you withdraw the money and use it as income. So, if you have some savings, you should insure them somehow and you won’t have to pay taxes for that money.

Income Splitting Strategy

The income splitting strategy is all about moving some of your income to your family members who are in a lower tax bracket. You can do this by setting up a retirement plan for your spouse who earns less than you or establish a college savings plan for your kids. You can also hire your spouse or children. Having a professional relationship with your loved ones is not always easy, but it can save you a lot of money on taxes.

Invest In Self-Education or Training

In case attending a certain school or improving your skills is something that can benefit you, then you can pay for self-education or training and claim this on your taxes. If going to school or studying alone are not options for you, hiring an executive coach might help you perform better at your company. However, you should know that your training has to be directly connected with your role in the company. Let’s say you work in a content marketing department. In this case, your training has to be related to digital marketing and content writing. This is the only way this would be deductible. Any other type of self-education or training that has nothing to do with your position in the company will not be deductible.

Conclusion

Paying taxes is something we all must do. However, these smart and legal strategies will help you to minimize your taxes and save some money.