Proper financial planning reduces tax liability, making it less of a burden in achieving your short and long-term financial goals. Without it, you could face major tax implications.
From maximizing your tax deductions to minimizing your tax liability, TPI can devise appropriate tax strategies for your current situation, as well as to help plan for retirement. You won’t find a better group of tax planning experts in Virginia. Find out what happens to your tax liability with proper financial planning!
What Is Tax Liability?
Tax liability is the money or tax debt a person or organization owes a taxing authority, such as the IRS, from earning or generating income. It’s possible to pay taxes at the federal, state, and local levels.
The amount of tax debt is determined according to income, or capital gains made from the sale of an asset. It’s rare to not have any federal tax liability; this would happen only if your income is under the threshold for filing a tax return. High-income individuals generally have significant tax liability from income and/or investments.
How is Tax Liability Determined?
Employees have it easy: they can subtract their tax deductions from their taxable income to see their total tax liability.
On the other hand, self-employed individuals, business owners, and high-income individuals have more factors and income sources to consider when determining their tax liability, along with complicated calculations. With multiple income streams and assets to sort through, you’re more likely to make mistakes on your taxes and end up paying more than you should.
Avoid the stress of tax season and potential errors by hiring a tax advisor. They can also instruct you on deferred tax liability for future payments. Tax advisors can help you minimize tax liability through:
- Donations to charitable organizations
- Contributions to traditional employer-sponsored plans (e.g., 401(k) and 403(b))
- Increase retirement contributions
Contributing to Retirement Accounts
Proper financial planning can help you set up the best future for you and your family while reducing your taxable income. Depending on the type of account, you will have various options of contribution limits and tax savings from which you can benefit.
Financial Retirement Plan Examples
An employer-sponsored 401(k) allows you to make pre-tax contributions from your gross income. They will be taxed at your income rate using the current tax brackets at the time of withdrawal. In contrast, contributions for a Roth IRA are made using income that has already been taxed. As a result, there won’t be additional taxes at the time of withdrawal.
Don’t carry your tax burden alone; work with TPI Group to benefit from tax minimization and devise the right retirement strategy for your financial goals.
Reduce Tax Liabilities with a TPI Financial Advisor
TPI professionals know what tax credits you can take advantage of and where you can claim deductions. With our tax preparation and many other services, we can provide financial planning for today, tomorrow, and decades from now.
Contact us today to get started on a financial plan!