For years it was assumed that tax planning was reserved for the wealthy. While wealthy individuals will see the most benefit from tax planning, even middle-income earners can reap the benefits..
Basic tax planning starts with your AGI or Adjusted Gross Income. This is your total income after any adjustments or credits have been applied. Reducing your AGI is the number one goal of many tax planners, and the easiest way to do this is to contribute money to a 401(k) or other retirement plan. Contributing to a qualified retirement plan is the easiest way to positively impact your AGI; reducing your taxable income while also building your nest egg for the future.
Aside from lowering your AGI, another area involves investing tax efficiently. We always consider tax ramifications when making our investment recommendations. This can have a profound effect on your return on your investments.
*This content is developed from sources believed to be providing accurate information. The information provided is not written or intended as tax or legal advice and may not be relied on for purposes of avoiding any Federal tax penalties. Individuals are encouraged to seek advice from their own tax or legal counsel. Individuals involved in the estate planning process should work with an estate planning team, including their own personal legal or tax counsel. Neither the information presented nor any opinion expressed constitutes a representation by us of a specific investment or the purchase or sale of any securities. Asset allocation and diversification do not ensure a profit or protect against loss in declining markets. This material was developed and produced by Advisor Websites to provide information on a topic that may be of interest. Copyright 2023 Advisor Websites.