Tax Planning is different than tax preparation. Accountants prepare taxes after you have paid either through withholding or your payroll. Think of tax preparation as starting today and looking back one year. Tax planning is starting today and looking forward either 1 day or 30 years. For myself, someone who makes no set income and is not on a salary, tax planning can be a challenge in the short term. However can be accomplished and definitely is effective for those with predictable incomes. Have you ever met with your CPA at the beginning of the year to discuss next years taxes? Unheard of right? It shouldn’t be…
Assume you overpaid last years taxes and are set to receive a $5000 tax return. Good for you,, any time you get money is a happy moment, but here we are talking about making the best decision every time to create wealth. The very best or most efficient answer would be to recieve no refund or even owe the government. Look at it this way you gave Uncle Sam a $5000 interest free loan,,, I will take one..
By recieving no return you had that $5000 working for you either in an investment account or building in your cash reserve to avoid high credit card interest rates. Most people believe that owing at the end of the year is the worst that could happen. Why not recieve an interest free loan from the government.
