As you experts in tax services in Kissimmee we know that the main aim of tax planning is to manage your finances and arrange them in such a way so that the amount you pay in taxes is minimized. At the bottommost level, this can be done in three ways:
- reduce income
- increase decoctions
- use tax credits
Below is a brief description of these which would help you in understanding the process better. Before proceeding, it must be made very clear that while all this can be done on your own, you should avail tax services in Kissimmee. Not only will the task be accomplished in less time, it would be done in a much better and more efficient way.
Reducing Your Income
Adjusted Gross Income, abbreviated as AGI, is one of the key factors which determine your taxes. There are many variables that depend on AGI such as the tax rate and tax credits. AGI is not only used for tax purposes it is also used by mortgage lenders, banks and other financial programs. In a nutshell, AGI is perhaps your most important financial measure. So this is where you should start your tax planning.
So what exactly is AGI? It is the total income amount that you earn minus adjustments. Obviously, the more your income is, the greater your AGI will be. As for you taxes, they are also directly proportional. But an increase in taxes is not what you want. So what do you do? Reduce your income and your taxes automatically go down.
Probably the best way to reduce income is to contribute funds to a retirement account like 401(k). This reduces incomes and your taxes will automatically be lowered. Another way to decrease your AGI is to make use of your adjustments. Increase them, and your AGI decreases. This can be done by contributing money to a student loan, alimony or any traditional IRA.
Taxable income is the second important factor that is used for evaluating your taxes. Taxable income is the amount that is left when you remove exemptions and deductions from your AGI. A standard deduction is valid in almost every case and in some situations; you can itemize your deductions.
Itemized deductions comprise of many expenses such as health care, property taxes, tax preparation fees, charity gifts and so on. Throughout the year, you should keep track of these and store their receipts. A spreadsheet or an accounting software system can help you with these. When it is tax time, compare your standard deduction with your expenses, and choose the lower value.
Now the question is how you can increase your deductions? Deductions depend on your filing status and your dependents. You can either increase the number of dependents or you could get married, which would change your filing state.
You can also reduce your taxable income through states taxes, mortgages and charity gifts. Appoint a reputed firm that offers tax services in Kissimmee and you would gain more advice.
Tax credits can directly reduce the amount you pay in taxes. These include college expenses, retirement funds and adopted children.
If you need more information about our, Kissimmee accounting and tax services, please contact us at 407-502-2400. Freedomtax Accounting’s staff has been providing honest accounting services and tax services for 15 years. Our Orlando accounting and tax firm has its main offices in Kissimmee, FL. Our services are provided nationwide, but mainly in the Central Florida market to areas like Orlando, South Orlando, Kissimmee, St. Cloud, Poinciana, Clermont, Davenport, and Hunters Creek, FL. Our tax accountants and IRS enrolled agents (irs ea) specialize in corporate accounting and bookkeeping, tax services, tax preparation, back taxes help, tax debt relief, tax resolution, tax planning, itin numbers, incorporations, and non profit 501c3 tax exempt status applications.