Tax Planning can achieve taxpayer’s goals

Tax planning can assist in building financial wealth for individuals. Consequently, one of the major goals of tax planning is to minimize a person’s taxable liability. Tax planning might include at least three basic tax planning strategies to assist with tax planning.

1. Timing Strategies – deferring income recognition can reduce tax liability.

2. Income Shifting Strategies – this strategy is most beneficial to taxpayers who transfer money within the business or family member and will decrease tax liability. The strategy is to move income from a higher bracket to a lower bracket.

3. Conversion Strategies – Because the tax laws do not treat all income and deductions the same. That allows for the taxpayers to recast income and deductions to recent a more favorable tax bill.