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Tax Planning

As the old saying goes, the only things certain in life are death and taxes. The former is perhaps more rigidly inevitable than the latter. 

There are ways to minimize your tax burden, but doing so requires the right planning and the help of an experienced tax law lawyer.

What Is Tax Planning?

Put simply, it is the act of analyzing your finances to ensure that you pay the lowest tax possible. 

Tax efficiency is not equivalent to tax avoidance. The latter is illegal — the former is smart living. 

There is nothing wrong with using federal and state tax laws to minimize tax liability. However, tax planning should be a core element of your general financial planning.

Here are some of the matters that you will need to review.

1. Retirement Saving Strategies

Minimizing your tax liability through a retirement plan is both popular and effective. 

Contributing to an individual retirement account (IRA) can reduce the amount that counts toward your gross income, which in turn will reduce the amount of money you pay in taxes. 

The 401(k) is another retirement plan recognized by the IRS. You may have access to such a plan if you work for a large company. As a participant, you can defer income from your paycheck into the company’s 401(k). 

The dollar amounts that go into 401(k) plans tend to be higher than what goes into an IRA, which means your tax liability will be even less with this plan.

2. Tax Gain-Loss Harvesting

If you are an investor, this tax plan may be right for you. Tax gain-loss harvesting allows you to use losses in your investment portfolio to offset your capital gains tax. Using this particular strategy can be complicated. It is best to put most of the work into the hands of an experienced tax attorney.

Basic Tax Planning Strategies

There is a widely circulated myth that the tax code is designed to exclusively benefit wealthy individuals and high-income earners. This is not the case. 

You can reduce your tax liability through the retirement plans discussed above and take advantage of tax deductions and tax credits. You can also meet this aim by contributing to health savings accounts (HSAs), investing in stocks with qualified dividends, buying municipal bonds, and moving to a state with a low tax burden.

It is also possible to contribute to an IRA and a 401(k) and have them both count toward minimizing your tax burden. However, there is a legal limit to the amount you can contribute per year. A tax attorney will ensure that you stay within the law on this matter.

Protecting Your Present and Your Family’s Future

Tax planning is about decreasing the amount of money you are compelled by law to hand over to the government. It is about using more of your hard-earned money to enjoy your life and to protect your family’s future. 

As discussed above, death duties on an estate can seriously burden your surviving family members. Even if you are in perfect health and death is the furthest thing from your mind, you should start planning now for the taxes that will be due on your estate when it is passed on to those who will inherit. 

Working with an attorney can help protect the wealth you intend to pass on to your loved ones.

The bottom line is that many legal ways to lower your tax liability exist. Paying into retirement accounts, taking deductions and credits for which you are eligible, and making the right investments are among them. Working with an experienced tax attorney is the only way to fully leverage the tax code in your favor. 

To get the tax advice you need, contact the law offices of Houck Menninger Law, LLC.

Summing Up

You have worked hard to earn the lifestyle you currently enjoy. You should do all you can to protect your money and investments from the tax man. Unforeseeable events and bad-faith actors can also threaten your wealth and possessions. The best way to protect them is to retain the services of lawyers specializing in asset protection and tax planning.

If you have spent your life building a business you want to keep in the family, then now is the time to start planning your succession. This approach is the best way to ensure its future success. As the founding family member of the company, you will set standards and precedents for future generations to follow. Engaging a business planning lawyer will help you succeed where so many others have failed.

An experienced lawyer can also be of service if you are a military veteran. You should not be put off by the complex challenge of claiming the benefits you are entitled to. The difficulties of making a valid and successful claim can be overcome with the right legal guidance. Even if your discharge from the service was years ago, you may still be eligible for certain benefits. You should speak to an attorney specializing in veterans’ planning benefits to get what is rightfully yours.

Hiring the Right Attorney

Houck Menninger Law, LLC is a law firm that specializes in all the areas discussed above. We approach each client’s situation on its own terms and provide customized solutions. From the moment of your first consultation, you will be treated with the care, compassion, and dignity you deserve. Contact us today if you need legal advice and action in asset protection, veterans’ benefits, elder law, business planning, or tax planning.

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Houck Menninger Law, LLC (“HM Law”) has placed the information on this website as a service to the general public. Use of this website does not in any manner constitute an attorney‐client relationship between HM Law and the user. While the information on this site is about legal issues, it is not intended as legal advice or as a substitute for the specific advice of your own attorney. Anyone seeking specific legal advice or assistance should retain an attorney. This website may also include inaccuracies or typographical errors and may not otherwise be up-to-date.

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