"There are only two certainties in this world: death and taxes - though most of us would prefer to avoid both." We cannot help with the first, but we can make suggestions regarding the second..
The three main areas of tax - Income Tax, Capital Gains Tax and Estate Taxes - interact with each other and in order to reduce your overall liability, it is essential that continual planning and implementation of tax efficient arrangements be in place. Unfortunately, many people only think of seeking advice once a tax lability has been crystallized.
There are several basic tax-cutting techniques that can be implemented by many people with a little planning. These include:
- Splitting income among family members or other legal entities in order to get more of the income taxed in lower brackets.
- Shifting income from one year to another in order to have it fall where it will be taxed at a lower rate.
- Shifting deductions from one year to another to place them where the tax benefit will be greater.
- Deferring tax liability through various investment choices with preferential tax treatment.
- Structuring your affairs to obtain a tax deduction for some personal expenses that might otherwise be non-deductible.
Although you only file a tax return once a year, tax planning is an ongoing process throughout the year and indeed, one's lifetime.