Real Estate Investor Resources
You probably think you have a good idea of your finances and how you want them to evolve in the following years, but do you actually have a plan? If you do, is it considering taxes? In most cases, taxes are the biggest expense for both, individuals and businesses, and appropriate planning can make the difference between reaching our goals and not doing so. Test how well you know your tax situation:
How do your taxes fit in the success equation of your financial life?
Your financial life includes income and expenses, businesses and jobs, investments and debt, but also short and long-term financial goals and strategies for achieving them. In this context, including taxes in the calculations is a massive determinant of success.
Do you have a solid understanding of your income?
Active, passive, and investment income. Each type of income is taxed differently and your cash flow might not be the same all year round. Strive to diversify your business and investments because the most powerful tax strategies are available to those with a combination of multiple types of income.
Are you set up with the appropriate entity structure?
Reducing your tax liability is an evolving process that should consider the structure, debt, and growth perspectives of your business. This requires constant communication with your CPA to ensure that you are utilizing the entity structure that best suits your current situation.
Are you maximizing all tax-deferred opportunities?
Contributing to traditional retirement accounts is one of the most popular ways to reduce the current tax burden as an individual. You could shelter up to $66,000 in a traditional 401(k) in 2023 ($22,500 as the employee, $63,500 as the employer). Not only does the taxable present income decrease, but the gains from the contributions will compound tax deferred and be taxed at a lower rate in retirement when your need for cash generally decreases.
Need help for an end of the year review?
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