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TAX PLANNING STRATEGIES

Over 50+ tax planning strategies that can help individuals and businesses reduce their overall tax burden and maximize their income.

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1

Income Deferral

Postponing the receipt of income to a future tax year to delay taxation and potentially benefit from lower future tax rates.

Income Deferral

2

Income Splitting

Distributing income among family members in lower tax brackets to reduce overall tax liability.

Income Splitting

3

Tax-Deferred Accounts

Contributing to retirement accounts like IRAs and 401(k)s, where earnings grow tax-deferred until withdrawal.

Tax-Deferred Accounts

4

Tax Credits and Deductions

Maximizing the use of available tax credits (e.g., education, energy) and deductions (e.g., mortgage interest, charitable donations) to reduce taxable income.

Tax Credits and Deductions

5

Capital Gains Management

Time the sale of investments to benefit from lower long-term capital gains rates. You can also offset gains with losses to minimize taxes on your investment returns.

Capital Gains Management

6

Charitable Contributions

Donating to qualified charities to receive tax deductions while supporting philanthropic causes.

Charitable Contributions

7

Estate Planning

Create a plan to transfer assets to your heirs in a tax-efficient manner, minimizing estate taxes.

Estate Planning

8

Business Expense Deductions

Ensure you claim all legitimate business expenses to reduce your taxable income. This includes costs such as office supplies, travel, and other operational expenses.

Business Expense Deductions

9

Health Savings Accounts HSAs

Contribute to HSAs for tax-deductible contributions, tax-free earnings, and tax-free withdrawals for medical expenses. This is a triple tax advantage that boosts your healthcare savings.

Health Savings Accounts HSAs

10

Education Savings Plans

Use 529 plans or Coverdell ESAs to save for education expenses with tax advantages. These plans offer tax-free growth and withdrawals for qualified education costs.

Education Savings Plans

11

Roth IRA Conversions

Convert traditional IRAs to Roth IRAs to enjoy tax-free withdrawals in retirement. This strategy can be especially beneficial if you expect to be in a higher tax bracket in the future.

Roth IRA Conversions

12

Gifting Strategies

Give gifts up to the annual exclusion amount to reduce the size of your taxable estate. This can help manage estate taxes while supporting family members.

Gifting Strategies

13

State and Local Tax Optimization

Strategically plan for state and local taxes by considering residency status and the timing of income and deductions. This can lead to significant tax savings based on your location.

State and Local Tax Optimization

14

Tax Loss Harvesting

Sell investments at a loss to offset capital gains and reduce your taxable income. This strategy helps you manage your investment portfolio while optimizing tax outcomes.

Tax Loss Harvesting

15

Deferred Compensation Plans

Participate in plans that allow deferring a portion of your salary to future years. This approach is often used by executives to manage their tax brackets and retirement savings.

Deferred Compensation Plans

16

Small Business Tax Credits

Utilize specific tax credits available to small businesses, such as the R&D credit or the small business health care tax credit. These credits can significantly reduce your business's tax liability.

Small Business Tax Credits

17

Section 179 Deduction

Deduct the full purchase price of qualifying equipment and software purchased or financed during the tax year. This immediate deduction helps businesses manage cash flow and investment costs.

Section 179 Deduction

18

Bonus Depreciation

Immediately deduct a large percentage of the purchase price of eligible assets. This deduction accelerates tax savings and improves your financial position.

Bonus Depreciation

19

Research and Development Tax Credit

Receive a federal tax credit for businesses that incur R&D expenses in the United States. This incentive encourages innovation and helps offset the costs of development projects.

Research and Development Tax Credit

20

Home Office Deduction

Self-employed individuals can deduct certain home expenses when using part of their home exclusively for business. This can include a portion of your mortgage, utilities, and maintenance costs.

Home Office Deduction

21

Vehicle Expense Deduction

Business owners and self-employed individuals can deduct costs related to the business use of their vehicle. This includes mileage, gas, repairs, and depreciation.

Vehicle Expense Deduction

22

Depreciation Deductions

Recover the cost of property and assets over time through annual deductions. These deductions help businesses spread out the expense and reduce taxable income each year.

Depreciation Deductions

23

Energy-Efficient Commercial Building Deduction

Get a tax deduction for installing energy-efficient systems in commercial buildings. This not only reduces your tax bill but also lowers your long-term energy costs.

Energy-Efficient Commercial Building Deduction

24

Qualified Business Income QBI Deduction

Eligible self-employed and small business owners can deduct up to 20% of their qualified business income. This deduction can significantly lower your taxable income and save money.

Qualified Business Income QBI Deduction

25

Net Operating Loss NOL Deduction

Use a net operating loss in one year to offset taxable income in another year. This provision helps smooth out taxable income and manage tax liabilities over multiple years.

Net Operating Loss NOL Deduction

26

Interest Expense Deduction

Deduct interest paid on business loans to reduce your taxable income. This deduction can help lower the cost of borrowing and improve your cash flow.

Interest Expense Deduction

27

529 Plan Contributions

Enjoy tax-free growth and tax-free withdrawals for qualified education expenses. These contributions are a smart way to save for your child's future education needs.

529 Plan Contributions

28

Medical Expense Deductions

Deduct medical expenses that exceed a certain percentage of your adjusted gross income (AGI). This can include out-of-pocket costs for treatments, prescriptions, and health insurance premiums.

Medical Expense Deductions

29

Child and Dependent Care Credit

Receive a credit for work-related expenses incurred for the care of children and dependents. This credit helps offset the cost of daycare, after-school programs, and other care services.

Child and Dependent Care Credit

30

Retirement Savings Contributions

Get a credit for low to moderate-income taxpayers saving for retirement. This incentive encourages savings and helps you build a secure financial future.

Retirement Savings Contributions

31

Work Opportunity Tax Credit WOTC

Receive a credit for hiring individuals from targeted groups who face significant employment barriers. This credit supports workforce diversity and helps reduce your business's tax liability.

Work Opportunity Tax Credit WOTC

32

Foreign Earned Income Exclusion

Exclude a certain amount of foreign earned income from U.S. taxation. This benefit is valuable for U.S. citizens and residents working abroad.

Foreign Earned Income Exclusion

33

Health Coverage Tax Credit

Receive a credit that pays a percentage of health insurance premiums for eligible individuals and their families. This credit helps manage the cost of health coverage.

Health Coverage Tax Credit

34

Adoption Credit

Get a credit for qualified adoption expenses paid to adopt an eligible child. This credit eases the financial burden of adoption and supports family growth.

Adoption Credit

35

Qualified Small Business Stock Exclusion

Exclude gains from the sale of qualified small business stock held for more than five years. This exclusion incentivizes investment in small businesses and supports long-term growth.

Qualified Small Business Stock Exclusion

36

S Corporation Conversion

Convert to an S Corporation to benefit from pass-through taxation. This conversion can help reduce your overall tax liability and simplify your business's tax structure.

S Corporation Conversion

37

Backdoor Roth IRA

A method for high-income earners to contribute to a Roth IRA by converting a traditional IRA. This strategy allows for tax-free withdrawals in retirement, even for those who exceed Roth income limits.

Backdoor Roth IRA

38

Employee Stock Purchase Plans ESPPs

Buy company stock at a discount, often with favorable tax treatment. These plans can provide significant financial benefits and align employee interests with company performance.

Employee Stock Purchase Plans ESPPs

39

Intra-Family Loans

Give low-interest loans to family members to shift income and reduce estate size. This strategy helps manage family wealth and minimizes tax burdens.

Intra-Family Loans

40

Flexible Spending Accounts FSAs

Set aside pre-tax dollars for medical and dependent care expenses. FSAs offer significant tax savings and help budget for out-of-pocket costs.

Flexible Spending Accounts FSAs

41

Health Reimbursement Arrangements

Employer-funded plans that reimburse employees for out-of-pocket medical expenses. HRAs offer tax-free reimbursements and flexible healthcare spending.

Health Reimbursement Arrangements

42

Like-Kind Exchanges 1031 Exchanges

Defer capital gains tax on the exchange of like-kind properties. This deferral helps manage real estate investments and maximizes capital efficiency.

Like-Kind Exchanges 1031 Exchanges

43

Qualified Personal Residence Trust

Use a trust to remove a personal residence from the estate and potentially reduce estate taxes. This strategy helps manage estate planning and preserve family wealth.

Qualified Personal Residence Trust

44

Charitable Remainder Trusts

Receive income and tax benefits while contributing to a charity. CRTs provide a steady income stream and support philanthropic goals.

Charitable Remainder Trusts

45

Charitable Lead Trusts

Provide immediate charitable contributions with the remainder going to beneficiaries. This trust structure benefits both charities and your heirs.

Charitable Lead Trusts

46

Installment Sales

Recognize capital gains over several years by spreading out the sale proceeds. This approach helps manage tax impact and provides a steady income stream.

Installment Sales

47

Excess Business Loss Limitation

Limit the amount of business losses that can offset non-business income. This rule ensures that business losses are managed prudently and align with tax regulations.

Excess Business Loss Limitation

48

Interest-Free Loans

Give interest-free loans between family members without tax consequences under certain limits. These loans support family members financially while avoiding gift tax issues.

Interest-Free Loans

49

Cost Segregation Studies

Identify and reclassify personal property assets to shorten the depreciation time for tax purposes. This strategy accelerates tax savings and improves cash flow.

Cost Segregation Studies

50

Conservation Easements

Donate a conservation easement on a property to receive significant tax deductions. This donation supports environmental conservation while providing tax benefits.

Conservation Easements

51

Bunching Deductions

Combine multiple years of itemized deductions into a single year to exceed the standard deduction. This technique maximizes your tax savings by strategically timing deductions.

Bunching Deductions

52

Coverdell Education Savings Accounts

Use tax-advantaged savings accounts for education expenses. These accounts offer tax-free growth and withdrawals for qualified education costs.

Coverdell Education Savings Accounts
Small Business Tax Credits

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