Tax Planning and Documentation in the USA

• Federal and State Income Tax
• International Tax (in case you have income sources cross-border)
• Taxes on royalties (for writers, music composers, etc)
• Property tax
• Taxes on capital gains

Based on your past financial records and income growth prospects your income in that particular tax year can also be determined almost accurately. This will allow you to calculate your taxable income as well and once the taxable income is ascertained, you can manage your investment plans and expenses for that year to reduce the taxable income. For example, if you get to know that there will be a 20% increase in your income, you will start putting more money in your pension funds.

Here are some suggestions to retain more of your income and optimise your taxes:

• Municipal Bonds: Tax free interest payment makes them worth considering. They are exempted from federal taxes, and in some states, even from state and local taxes as well. Though, these bonds offer lower interest rates.
• Long-Term Capital Gains: Favourable treatment of long-term capital gain from the investment in shares, mutual funds, real estate, bonds, etc is the USP here. Professional tax advisors can assist you in selling these investments to reduce tax liability.
• Side Business: A side business offers many tax advantages. If utilised for daily business operation, the expenses can be deducted from income reducing taxable income like health insurance premiums. Further, under IRS guidelines, a business owner can deduct a portion of his home expenses as well.
• Save via Retirement Accounts: The tax liability can be reduced by contributing to a 401(k) plan or 403(b). Those who don’t have a provision of retirement plan at work can avail tax exemptions by contributing to an Individual Retirement Account (IRA).
• Obtaining IRS Credits: Various IRS tax credits are available that reduce taxes, such as the Earned Income Tax Credit. People can avail it as per their social and economic status.

There is a very prevalent myth that “If I will file online, I can avoid all documentation and filing errors in my taxes”. That’s just not true!

Some common mistakes were like failing to attach Form 1099-R (for claiming retirement plans, annuities, etc), W-2 (if you are employed at 2 jobs) to mistakes like entering income in the wrong line. Some mistakes might even push your income to higher tax slabs or trigger tax audits, thus, it’s better to consult experts from the outset to avoid all the hassle.

Tax-loss harvesting can also offset a capital gains tax liability by selling securities at a loss.

We have worked with some remarkable individuals including High Net Worth Individuals and Ultra High Net Worth Individuals, providing them with holistic and comprehensive tax solutions.

We can help you plan your taxes, along with providing a range of other services to take full accountability as your virtual CFO.