As we approach the end of the year, it’s natural to think about year-end tax planning. But here’s the thing: year-end planning can often feel rushed and reactive. That’s why Tom encourages you to think beyond just the next few weeks and plan for the entire year ahead.
Strategies to Consider (pay particular attention to #4):
- Defer Income If you’ve earned more than expected this year, consider deferring some of that income into next year. This gives you a full 12 months to plan and mitigate taxes effectively.
- Accelerate Expenses Shift expenses you’d typically pay in January or February into December. By doing so, you can reduce this year’s taxable income and give yourself a head start on next year’s planning.
- Evaluate Major Purchases Avoid rushing into big purchases like vehicles or equipment solely for tax benefits. Instead, ask yourself: Would I buy this if there weren’t a tax deduction? If the answer is no, hold off.
- Investment Decisions Never let the “tax tail wag the investment dog.” Make investment decisions based on sound financial principles, not just tax savings. For instance, oil and gas investments or last-minute real estate closings should align with your broader financial goals.
For year-round planning, your advisor should ask three essential questions to help accelerate your wealth-building, create a solid tax strategy, and reach your dream faster.
- How do you make your money?
- What are you going to do with your money?
- What will you do with your money when you die?
In Tom’s experience, most advisors don’t ask questions #2 and #3. Additionally, most successful entrepreneurs don’t have a clear answer for questions #2 and #3.
These questions form the foundation of effective tax and wealth planning. Knowing the answers will help you tailor strategies that align with your goals, whether that’s reinvesting in your business, expanding your real estate portfolio, or exploring renewable energy opportunities.
By combining professional investing principles with proactive tax planning, you’ll protect your wealth and position yourself for exponential growth.
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!