The definition of tax planning given by John Whittick as mentioned in - https://www.hwca.com/accountants-altrincham/importance-business-tax-planning/ is "the activities taken to minimize tax liabilities to ensure all available allowances, deductions, exclusions, and exemptions are working together in the most tax-efficient manner to reduce the total tax bill".

Why should one look into Tax Planning Services?

With the right tax planning, you can save your money! As easy as that sounds, it is not as easy to move with. Tax planning is a vast area of subject and requires knowledge that could not only benefit you but also keep you on the right side of the law. Therefore, it's always better to go for a tax planning professional. Tax planning services in Dallas like Value Financial Services will help you at every step of your financial journey. A financial Professional in Dallas could give you a better tax planning service than you could to your own self. The method and way tax planning is done are different in every case. So it's better to reach out to the right door or you could be making some costly mistakes.

Tax planning is highly personalized. It depends on your goals, CTC, saving pattern, assets allocation, protection required and the amount to be set aside for wealth creation. Preparing your own taxes can be done from multiple avenues available online but the chances of you ending up doing something wrong are high due to less knowledge and awareness of the law. Hence, resulting in paying out more money than asked for. That's why it's better to go for a financial Professional in Dallas and tax planning services in Dallas that are available to you in large numbers. One such is, I have already mentioned before, Value Financial Services. They are the best financial Professional in Dallas tx. They help individuals, families, and businesses to minimize taxes, minimize risk (could be market or litigation), maximize returns, therefore, increase net worth.

Apart from going for a financial Professional in Dallas, there are few tips given by Tina Orem for better planning of tax. Let's look into them.

I. Tax bracket- your first step to Tax planning

If you don't know where you are today, you cannot plan your future. So the first tax planning tip is to get a grip on what federal tax bracket you're in.

The United States has a progressive tax system. That means people with higher taxable incomes are subject to higher tax rates, while people with lower taxable incomes are subject to lower tax rates. There are seven federal income tax brackets: 10%, 12%, 22%, 24%, 32%, 35% and 37%.

No matter which bracket you're in, you probably won't pay that rate on your entire income. There are two reasons:

1. You get to subtract tax deductions to determine your taxable income (that's why your taxable income usually isn't the same as your salary or total income).
2. You don't just multiply your tax bracket by your taxable income. Instead, the government divides your taxable income into chunks and then taxes each chunk at the corresponding rate.

For example, let's say you're a single filer with $32,000 in taxable income. That puts you in the 12% tax bracket in 2020. But do you pay 12% on all $32,000? No. Actually, you pay only 10% on the first $9,875; you pay 12% on the rest. If you had $50,000 of taxable income, you'd pay 10% on that first $9,875 and 12% on the chunk of income between $9,876 and $40,125. And then you'd pay 22% on the rest because some of your $50,000 of taxable income falls into the 22% tax bracket.

II. Knowing the difference between tax deductions and tax credits

The best way to tax plan is to know your tax deductions and tax credits. In different ways, they contribute to tax reductions. Just by knowing the difference, you can create some very effective tax strategies that reduce your tax bill.

• Tax deductions are specific expenses you've incurred that you can subtract from your taxable income. They reduce how much of your income is subject to taxes.
• Tax credits are even better — they give you a dollar-for-dollar reduction in your tax bill. A tax credit valued at $1,000, for instance, lowers your tax bill by $1,000.

III. Standard deduction vs. itemizing

Deciding whether to itemize or take the standard deduction is a big part of tax planning because the choice can make a huge difference in your tax bill.

What is the standard deduction?

It's a flat-dollar, no-questions-asked tax deduction. Taking the standard deduction makes tax prep go a lot faster, which is probably a big reason why many taxpayers do it instead of itemizing.

It's a flat-dollar, no-questions-asked tax deduction. Taking the standard deduction makes tax prep go a lot faster, which is probably a big reason why many taxpayers do it instead of itemizing.

What does 'itemize' mean?

Instead of taking the standard deduction, you can itemize your tax return, which means taking all the individual tax deductions that you qualify for, one by one.

• Generally, people itemize if their itemized deductions add up to more than the standard deduction. A key part of their tax planning is to track their deductions through the year.
• The drawback to itemizing is that it takes longer to do your taxes, and you have to be able to prove you qualified for your deductions.
• Some tax strategies may make itemizing especially attractive. If you own a home, for example, your itemized deductions for mortgage interest and property taxes may easily add up to more than the standard deduction. That could save you money.
• You might be able to itemize on your state tax return even if you take the standard deduction on your federal return.
• The good news: Tax planning service or financial Professional in Dallas can help you figure out which deductions you're eligible for and whether they add up to more than the standard deduction.

And there are many more tips if you surf through the internet but even while reading through these tips you must have realized how vast and deep this topic is. I'm sure there are still so many doubts running in your head. Hence, you should reach out to your financial Professional in Dallas. Consult tax planning services agencies in Dallas that will get you through safe and sound! Don't take big risks with your hard-earned money. Avoid losing money in the process of saving money. It is always better to take the help of experienced professionals. Do smart work more than hard work!