While tax preparation in New York is all about ensuring you have the right forms and reports once filing season comes around, tax planning focuses on the tasks that you do day-to-day to minimize any penalties that may arise.
Tax planning is crucial for both individuals and businesses alike. Working with a tax planning company in New York is important, but there are also a few tricks you can do to make this process as smooth as possible.
Invest in Your NY Savings Accounts
Most individuals have come to the realization that life can be unpredictable after experiencing a global pandemic for more than a year. This is the perfect time to increase your savings accounts and make sure you are financially protected.
Financial experts often advise having six months’ worth of spending in savings. It is better to think in terms of time when it comes to spending, because everyone has different monthly bills. In fact, your own bills may rise or fall depending on your specific circumstances.
Start keeping track of your expenses to determine the appropriate savings amount for you. A tax planning company in NY can also help you in this regard.
Pay Off Your High-Interest Debt in NY
Once you’ve established savings and protection policies, you may not need to rely on credit cards or high-interest loans in an emergency. With these safeguards in place, it is prudent to pay off any debt.
High-interest debt can be particularly intimidating to tackle, but that is all the more reason why you should pay it off as soon as you are able.
Carrying debt is not only a financial burden; it can also harm your credit score and your peace of mind. Furthermore, paying off debt as quickly as possible reduces the total amount of interest paid over time.
Paying off debt also improves your credit score, which can prove beneficial to your tax situation. Working with a tax planning attorney in NY can help you strategize ways to use your tax returns towards settling any outstanding transactions you may have.
Take Out Insurance Policies
Whole life or disability insurance policies are a great way to spend your tax refunds in New York.
If you become ill or injured and are unable to work, an income protection policy can supplement your finances while you recover.
In a similar vein, paying your monthly premiums on a whole life insurance policy reduces its cash value over time. Whole life insurance diversifies your financial portfolio and can provide a source of funds that is not affected by market volatility.
For those seeking ways to plan taxes easy how in NY, you can also look into business insurance policies in order to prioritize your company’s profitability and growth.
Check Your Eligibility for Tax Programs
Not everyone may be eligible for tax programs, but it’s worth checking if there is one that works for you.
For instance, take start-up investors. The United States government has put certain programs in place to encourage consumers to invest in small businesses. These programs work to help mitigate some of the financial risk involved in such investments. They are:
- The Rollover Perk
- The Capital Gains Exemption
- The Loss Write-off
If none of your portfolio companies have yet matured, you won’t have to report anything about them unless you’ve received some sort of dividend or payment.
Keeping these rules in mind as you build your NY portfolio can help you make better decisions. For example, if you have the option to cash out on an investment you’ve held for four and a half years, waiting until you reach the five-year mark can save you thousands of dollars in taxes.
Plan Ahead With Melanin Tax Today
As a tax planning company in New York that values long-term relationships with its clients, we at Melanin Tax always make it a point to inform our customers of any changes in New York’s tax reforms.
Our tax planning attorneys keep these local laws and reforms in mind when assessing your current financial situation. In doing so, we are able to come up with a comprehensive plan that minimizes any tax penalties.
If you want to know more about our tax planning services, contact the Melanin Tax team today at (347) 943-6772.