EP 107

An Above Board Guide to Tax Planning

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Inside This Episode

John Kennedy, CFP® & Matthew Marcoux, CFP®, EA, break down the intricacies of tax planning and strategies that can transform your financial future. From decoding the difference between tax evasion and avoidance to uncovering smart tactics for saving on taxes, this conversation is packed with actionable insights. Learn how to maximize your savings with HSAs and IRAs, nail the timing of deductions, and stay ahead of the curve with insights into new tax rules affecting third-party payment apps like Venmo and PayPal. Don’t miss out—tune in now!

Three Biggest Insights

  • Choose Your Tax Expert Wisely
  • Understanding Tax Deductions as a Small Business Owner or Self-Employed Individual
  • Maximizing Tax-Advantaged Accounts

Key Takeaways

  • Tax Filing: Self vs. Professional: The decision between filing taxes independently or seeking professional assistance depends on factors like complexity, attention to detail, and the potential for savings. While self-filing is feasible for straightforward situations, individuals with more complex tax scenarios, such as small business owners or those with rental properties, may benefit from professional guidance to optimize deductions and avoid errors.
  • Understanding Deductions and Compliance: Small business owners need to be aware of deductible expenses, such as mileage and meals, and understand the rules surrounding them to avoid potential issues with the IRS. Additionally, adhering to tax regulations and being honest in reporting is emphasized as crucial to prevent future complications or audits.
  • Understanding 1099-Ks with Cash Apps: The proliferation of cash apps like Venmo and PayPal has changed how we transfer money, but it’s important to understand the tax implications. While using these apps personally doesn’t change much, using them for business purposes requires proper reporting.
  • Continuing Education and Professional Designations: Tax practitioners, such as Enrolled Agents, undergo rigorous training and continuing education to stay updated on tax laws and regulations. Choosing a tax professional with the right credentials can make a significant difference in navigating tax complexities and representing clients before the IRS.
  • Strategic Tax Planning: While charitable contributions can lower tax obligations, it’s essential to consider the underlying intent behind such contributions. Planning should focus on both minimizing tax liability and aligning with broader financial goals.
  • Maximizing Tax-Advantaged Accounts: Utilize HSAs, IRAs, and 401(k)s for tax benefits and long-term financial planning.
  • Strategic Timing of Deductions and Gains: Consider timing deductions, especially for charitable contributions, to optimize tax benefits. Manage capital gains and losses strategically to minimize tax implications.
  • Leveraging Qualified Charitable Distributions (QCDs): For retirees, QCDs offer tax advantages and help manage taxable income, especially when planning for Required Minimum Distributions (RMDs) and Social Security taxation