What is Pro-Active Tax Planning?
Pro-active means to prepare in advance for a known event. It also means to develop a course of action to achieve the most favorable outcome.
Most taxpayers depend on “information” they glean to run their business, manage their investments, increase sales and reduce expenses with the goal of making and increasing profits.
At the year end, you take your tax “information” to your tax professional, and they will prepare your tax return based upon that data. They will place the numbers in the correct spot on your tax forms and let you know the results. At tax time, your planning options are very limited.
By taking a “pro-active” approach to your taxes instead of “reactive” will have far better results.
William H. Rehnquist, Chief Justice of the United States Supreme court once said that “the law also recognizes that a taxpayer may structure a transaction in a manner that minimizes the tax consequences.”
What a Pro-Active does not do?
- Use questionable, aggressive, unsubstantiated strategies.
- Use gray areas in the tax law that will likely not pass an audit.
- Cross the line between legal “tax reduction” strategies and illegal “tax evasion” strategies.
A better approach.
- Taxes are complex and in many cases confusing, so you need to consult with a Pro-Active Tax Professional who has been trained to look for ways to lower your tax burden, not just fill simply someone who fills out the tax forms.
- This Pro-Active Tax Professional will want to assess your current situation, your business your sources of income, your dreams and goals, and develop a customized tax reduction strategy for you prior to the year end.
- You will meet with the Pro-Active Tax Professional who will explain the tax reduction plan to you.
- You will need to implement this tax savings plan.