Tax Planning for Beginners

As you begin to tax plan, you need to first have a grasp on two basic terms:

Tax deductions: These are what you can subtract from your taxable income. As you look over specific expenses you incur throughout the year, they may be deductible and can reduce the amount of income subject to taxes.

Tax credits: These are what can directly lower your taxes. A tax credit of $2,000 lowers your tax bill by $2,000.

Tax planning involves arranging your finances in order to maximize tax credits and tax deductions while legally reducing tax liabilities. This also involves considering the timing of income and purchases.

Of course, these are just the basics. If you want more information about tax planning and how much you could potentially save, then be sure to reach out!