Tax Minimization

An image of a phone overlaid by tax related text to illustrate tax minimization

Planning Beyond Tax Filing

Tax minimization is the process of assessing and reducing an individual’s or business’ tax liability through careful planning. With the ever-changing tax code, it’s important to determine what does and does not apply to your specific tax situation. At ARR & Co, we use a holistic and strategic approach to align your finances with your desired short- and long-term goals

Are you worried about overpaying or underpaying your taxes? Either way, you want to be efficient in estimating your tax liabilities. With ARR & Co, we help you with more than filing your tax returns. Throughout the year, we’ll work together to accurately track your financial picture and project your tax liabilities to prevent unpleasant or avoidable surprises come tax time. 

Personal Tax Minimization

When it comes to your personal tax returns and minimizing the amount of federal and state taxes paid, there are many variables to consider:

  • Life events, such as the birth of a child, marriage, divorce, college, retirement, starting a new business venture or other milestone
  • Gift giving to loved ones and charities
  • Retirement planning with pre-tax income to achieve long-term savings strategies

We’ll help you find the right balance between tax minimization strategies and financial goal achievement.

Business Tax Minimization

When it comes to reducing your business’ tax liability, you have a multitude of options. Things to consider:

  • Switching the type of business entity (e.g., from sole proprietorship to S-Corporation)
  • Equipment purchases and timing
  • Employee benefits and retirement plans
  • CARES Act (COVID-19 related) employer credits
  • Purchase of vehicles used for business operations

Tax Minimization Strategies

Every personal and business situation is unique. Therefore, finding the right tax minimization strategies really depends on how your finances are structured and your overall goals. Any recommendations are preceded by several in depth meetings and analyses. Examples of tax minimization strategies are:

Income Deferral
Also known as deferred income or deferred revenue, income deferral can reduce current tax liability. ARR & Co’s approach is to first consider your retirement plan options and other tax-preferenced accounts. To find the right solution for your situation — such as age, personal or business options — we’ll determine the trade off between being taxed now or later. There are many ways to defer income, such as:

  • Roth vs. Traditional IRAs
  • 401(k) vs. SEP (Simplified Employee Pension Plan) vs. Simple IRA
  • Health Savings Accounts
  • 529 Education IRAs

Income Spreading
For individuals or businesses with cyclical or volatile income streams, income spreading is a tax strategy to reduce the overall marginal tax rate paid on large sums of income. Our approach is to explore how to manage your tax brackets, avoiding a bump into a higher bracket in a single year. We’ll discuss net operating losses (such as carryovers and carrybacks) and potential installment sales for large capital gain transactions.

Tax Credit Planning
Unlike deductions or exemptions which reduce the amount of taxes paid, tax credits reduce the actual amount of tax owed. Our approach is to consider tax credits available for purchases in the current year, as well as explore employer tax credits, solar credits and electric-vehicle credits.

Capital Assets & Investments
Capital improvements such as equipment purchases, real property investments, or saving in long-term accounts with tax benefits, can be a part of an effective tax minimization strategy. We help clients with:

  • 1031 tax free exchange for real property
  • Harvesting capital losses in a portfolio
  • Tax-free investments such as municipal funds and bonds
  • Stock option sales strategies to take advantage of favorable capital gains rates

Year-End Planning

The key to tax minimization is to begin planning before it’s too late to make course corrections that affect your personal and business’ tax-year liabilities. The first step is to understand your financial situation, how your business operates and is structured, and your short- and long-term goals. We’ll begin with an introductory meeting and discuss your tax minimization options.

Business CPA Services Start with a 30 Minute Consultation

 

“We have been a client  for a number of years and have used them to prepare our personal, business and rental property returns. We love the personal service, friendly office and the fact that they are proactive. We have used large and mid sized firms in the past and have found that Adam is much more thorough and caught many errors previously made by the larger firms. We would highly recommend this accounting firm.” 

~ Anna M. 

“I have been a client of Adams for over 10 years. The firm handles the accounting for 2 of my businesses as well as my personal return.  Over the years I have referred several people to Adam, all of them giving rave reviews to Adam and his team.”

~ Andrew N. 

“A+ Service. As a new business owner, I was a bit clueless and frustrated dealing with taxes. Rosenberg made everything simple and put me on the right path to success. Life’s good!”

~ Jessie O.