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Why You Should Consider Tax Planning It is not surprising that several tax payers would be surprised on how much they owed during tax time. To owe that much money is sometimes a wonder to these tax payers. The immediate reasons could be attributed to the lack of tax planning in some cases. Described as similar to financial planning, tax planning would involve taking a close look at one’s tax situation every year and the next. For those people who have financial investments, they are always referring to their financial advisors in order to keep track of their financial situation. Likewise, if you are going to check with your financial advisor, it is advisable that you also check with your tax advisor and see how your taxes are affected with your financial investments. Know that tax planning is not only applicable to those with financial investments, but it is for everyone, especially if you have financial changes that could affect the situation of your tax. Examples of financial changes would be like starting a business, withdrawal of money from a retirement account, buying a home, or sale or rental of a property. From these mentioned, your tax situation can significantly be affected.
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It is advisable to refer to your accountant before taking a kind of financial action and see how your action will affect your taxes. Most of the times, we call on our accountants after the fact only.
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It is advisable that you call immediately your accountant if you have any tax questions. Next is to listen to the accountant’s advice on what to do on anything that could affect their taxes. The importance of checking with your accountant before doing something is that he or she can advice you of the possible tax consequences of your actions. This professional can analyze your tax situations and can advice you on what actions to take so that you will not end up owing lots of money during tax time. Another importance of tax planning is to know when you are due for paying your taxes. Know that the law requires that you pay what your earnings are during the year and these would come through taxes. So for those who are paid as employees, your taxes will be taken from your paychecks, your employer will withhold that money and pays to the government all year round. If you work for yourself and get income through it, you can pay to the government directly based on the amount of your earnings. Tax planning being done during the year is important since you can save some money during tax time.