Marcela Kane Lantrip is an international tax professional with nearly two decades of experience in her field. Though she works with global organizations to manage their taxes, many of the practices that Marcela Kane Lantrip applies to her work also apply to small businesses and to personal finance situations.
Tax planning, for example, is a good practice for all individuals and organizations that file taxes. The basics of tax planning are outlined below:
Adjusted Gross Income (AGI) – Your AGI is a primary factor in determining how much you owe on your taxes, among other things, and lowering it can improve your end-of-year outcome. Reducing your AGI doesn’t mean seeking a lower paycheck, but it instead refers to contributing more to your retirement plan and to making similar adjustments to your financial management. The lower your AGI, the less you’ll owe on your taxes.
Tax Deductions – Tax deductions are a part of lowering your AGI and, as a result, decreasing what you owe. Almost everyone can claim standard deductions; with an itemized approach, you can increase your deductions through donations, tax prep fees, and work-related expenses.
Tax Credits – Once you’ve lowered your AGI as much as possible, through deductions, 401(k) contributions and more, it’s time to look at tax credits. Tax credits are available in certain situations pertaining to adoption, retirement and college courses, and they can increase your tax return or further lower what you owe.
Even if you’re not an experienced tax pro like Marcela Kane Lantrip, you can apply tax planning to improve your financial situation. Seek assistance from a tax professional if you’re unsure of how to move forward.