How to Use Tax Planning for Wealth Building

I tell all my tax preparation clients that the true key to building wealth lies in building assets. A savings account in a bank is not the answer. Bank accounts have low interest rates, so you will barely make any money. However, a solid investment strategy and smart tax planning will allow your money to work for you.

Regardless of how much money you make, you can build wealth over time through assets.

Build Wealth With Lower Taxes

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 an asset building strategies. Assets create real wealth, and smart tax planning converts your income into assets. How?

Unless you have some tax secrets up your sleeves, the more you make, the more you will pay in taxes. For 2018, a high earning single person was taxed at a rate of 35 percent for earnings between $200,000 and $500,000. Married people had to pay that rate on earnings between $400,000 and $600,000.  Medium earners, depending on their income level, paid 22% - 32% of their adjusted income in taxes. That makes it very difficult for anyone 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. 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 How? 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. 

Let us help you plan ahead for growth!

Charles

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