Tax planning involves a series of strategic steps to reduce an individual’s tax liability and increase savings. It starts with a thorough review of the individual’s financial situation, including income, expenses, investments, and assets. By analyzing these factors, individuals can find opportunities for tax optimization.
“To effectively plan your taxes, it’s important to stay updated on tax laws and regulations. This means keeping up with changes in tax legislation and knowing about various deductions, credits, exemptions, and incentives,” says Alok Kumar Agarwal Alankit. Understanding these tax laws helps individuals take advantage of them and make better financial decisions.
Timing is crucial in tax planning. Managing when you receive income and pay expenses can significantly affect your tax liabilities. By delaying income or accelerating deductible expenses into the right tax year, individuals can lower their overall tax burden and achieve better tax outcomes.