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Posted by: Charles P Myrick CPA Posted on: May 15 2018 Posted in: personal finance, investing

From Tax Preparation to Financial Planning

The true key to building wealth lies in building assets. Regardless of how much money you make, you can build wealth over time through assets. Think about how much of your life involves bills, taxes, purchases, contracts, etc. When it comes to financial planning, your tax professional is in a unique position to give you advice on asset building strategies. Why not take advantage of the time you spent preparing for your tax filing and reconnect with your CPA to develop a financial plan for building wealth. 

Some people think that putting money in a savings account is a good as making an investment. However, it is impossible to build wealth if you just have money in a bank account. Bank accounts have low interest rates, so you will barely make any money. On the other hand, your money works for you when you invest it. 

Build Wealth With Lower Taxes

Unless you have some tax secrets up your sleeves, the more you make, the more you will pay in taxes. In 2017, the federal tax rate for single people with earnings over $418,400 was 39.6%. Married people had to pay that rate on all earnings over $470,400. That makes it very difficult to build wealth on income alone. However, your assets aren’t taxed the same way. The system is set up to go after income instead of wealth.

Tax strategies that reduce the amount of taxes you pay can increase your ability to invest. Assets create real wealth, and smart tax planning converts your income into assets. So if you build assets, you can avoid paying high taxes and carry your wealth over from one year to the next.

Tax Saving Strategies That Work

Most people benefit from having a financial expert in their corner. Here are three tax-efficient methods for shifting your resources away from tax payments to asset building and security.

  • Reduction. A thorough analysis of your filing status and deductions is an effective way to reduce the amount of taxes you pay. Your CPA has the knowledge of your personal finances and the expertise to combine smart, personalized planning with annual tax preparation and filing.
  • Elimination. An experienced CPA can work within the tax code to advise you on how to male smart decisions that will avoid capital gains or identify tax-exempt investments.
  • Deferral. A valuable asset to most individuals is their retirement account. A common question is whether to choose a traditional (tax-deferred) or a Roth option.That decision involves the analysis of which tax situation is most appropriate for the individual. Your CPA has all the data needed to help you make a wise choice. 

The Tax Cuts and Jobs Act of 2017 will go into effect January 1, 2018. But, you won’t file your federal tax return for the 2018 tax year until 2019, giving you time to understand how the changes will affect you. Many of the changes will affect individuals in different ways that may seem very confusing. It is wise to consult with your tax advisor to clarify your particular situation and make tax planning an integral part of your long-term financial planning.

 

Download Your Copy of Why Your Earnings Won't Make You Wealthy!


Charles P Myrick CPA offers tax preparation for individuals using a process that combines smart, personalized planning with annual tax preparation and filing. Our job is to help you know about all the available tax opportunities that meet your individual needs and circumstances. We work closely with tax lawyers, and investment advisors to ensure that all the details are legally sound, technically accurate, and working to your maximum benefit. Contact us to learn more: (202) 789-8898 

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