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Posted by: Charles P Myrick CPA Posted on: Mar 20 2018 Posted in: personal finance, investing

What Do Taxes Have to Do With Wealth?

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. Some people think that putting money in a savings account is as 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. 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 make 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. 

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