BUS 215 Week 1 Discussion 2, Tax Planning

BUS 215 Week 1 Discussion 2, Tax Planning BUS 215 Week 1 Discussion 2, Tax Planning Tax Planning Read David J. Marotta’s article, “Seven Tax-Planning Strategies to Dodge the Tax Bullet.” Based on the information presented in the article, discuss the following: What is tax planning? Tax planning can help in reducing the taxes you pay and help you achieve financial goals. It can be done by using all your available allowances, deductions, exclusions, exemptions to reduce income and/or capital gains. Tax planning is the art of arranging your affairs in ways that postpone or avoid taxes. By using effective tax planning strategies, you can have more money to save and invest or more money to spend. Tax planning is deferring and avoiding taxes by taking advantage of beneficial tax law provisions, increasing and accelerating tax deductions and tax credits by maximizing the use of all applicable breaks. What is the difference between tax avoidance and tax evasion? Tax avoidance uses legitimate methods to reduce taxes while tax evasion uses illegal actions to reduce taxes (Kapoor, Dlabay & Hughes, 2012). Tax avoidance, people use artificial but legal methods to minimize the tax they pay, and tax evasion people act illegally to pay les tax, or no tax at all. Which tax planning strategies will work for you? By developing and implementing appropriate strategies to lessen or shift current and future tax liabilities, I can improve my goals of meeting long- and short-term objectives. By placing my investments in the appropriate tax efficient accounts like employee retirement plan (401k), an IRA, or another tax deferred account can help with income tax planning. Reference: Kapoor, J.R., Dlabay, L.R., & Hughes, R.J. (2012). Personal Finance (10th ed.). New York: McGraw-Hill Irwin. ISBN: 0697 Marotta, D. J. (2012, November 20). Seven tax-planning strategies to dodge the tax bullet. Forbes. Retrieved from