Year-end planning can save money at tax time

Many people confuse tax planning with tax preparation and only think about the subject when preparing their annual tax return. However, there is little you can do to actually lower your tax bill when preparing your return. If your goal is to reduce income taxes, you need to be aware of tax planning opportunities throughout the year.

Take time early in the year, perhaps as part of the tax preparation process with your tax advisor to assess your tax situation, looking for ways to reduce your tax bill. Consider a host of items, such as the types of debt you owe, how you’re saving for retirement and/or college, which investments you own, and what tax-deductible expenses you incur. Often your tax advisor can propose strategies you might not have considered.

Throughout the year, consider the tax consequences before making important financial decisions. This will prevent you from finding out later that there was a better way to handle the transaction for tax purposes.

November is the perfect time to look at your tax situation as it gives you plenty of time before year-end to implement any additional tax-planning strategies. At that point, you’ll also have a better idea of your expected income and expenses for the year. You may then want to incorporate strategies you hadn’t considered earlier in the year, such as selling investments at a loss to offset capital gain.

Reesa Manning is Vice President and Senior Financial Advisor at Integrated Wealth Management, specializing in retirement and income planning. For more information, call Reesa at (760)834-7200, or [email protected].