In June, the average person is probably not thinking about taxes. However, if you’re reading this, you’re probably not average. If you’re committed to reaching your wealth dream as fast as possible, a mid-year wealth and tax strategy review is an essential practice.
Conducting a mid-year review can significantly impact your financial health by identifying opportunities for tax savings, optimizing investment strategies, and ensuring your financial plans align with your goals.
3 Steps to Take to Complete Your Mid-Year Review
Step 1: Update Your Wealth Dream
- Revisit your financial goals and adjusting them based on any life changes.
- Evaluate the performance of your current investments.
- Identify new investment opportunities that align with your wealth-building objectives.
Step 2: Maximize Tax Savings
- Utilize Tax Credits:
Tax credits directly reduce your tax liability and can result in substantial savings.
Explore credits available for energy-efficient home improvements, education, and other qualifying expenditures.
- Claim Deductions:
Although less impactful than credits, deductions significantly lower your taxable income.
Common deductions include business expenses, travel, education, and home office expenses.
Keeping accurate records and working with a tax advisor can help maximize these deductions.
- Review Entities and Tax Status:
Structuring your business entities appropriately and choosing the right tax status can provide additional deductions and credits.
Consulting with a tax advisor to optimize your business structure is crucial.
Step 3: Review Transactions and Bookkeeping
- Transaction Review:
Assessing year-to-date transactions helps identify potential tax liabilities and opportunities for deferral or reduction of taxes.
For example, planning a 1031 exchange for property sales can defer capital gains taxes.
- Bookkeeping Accuracy:
Ensuring your books are up-to-date and reviewed by a tax advisor helps identify discrepancies and areas for tax savings.
A mid-year wealth and tax strategy review is not just about compliance; it's a proactive approach to achieving your financial dreams and maximizing your wealth. By focusing on tax savings, updating your financial goals, and ensuring accurate bookkeeping, you can significantly enhance your financial situation and keep more of what you earn.
Engaging with a tax advisor throughout the year is crucial to navigating complex tax laws and implementing effective strategies. Start your mid-year review now and take control of your financial future.
Want to learn more about how you can make way more money and pay way less in tax? Book a call with the team at TFW Advisors® today!