Most of us have one or two relatives who we keep avoiding during family reunions. That weird relative that you know you should talk to, but ignore as much as possible until it’s inevitable during those once a year family get-togethers where everyone brings their children, pets, and other surprise guests. Reasons for avoidance may include their embarrassing habits, inappropriate questions or even just their silly manners. Just like those reunions, we have that one time a year when we need to face it and do our taxes.
Taxes to fund government operations come from a variety of sources. Understanding how much you pay, to whom, and what you have control over is a big part of the tax strategy in your wealth management process. Being able to manage around high-income years, years with large capital gains taxes, or understanding the tax-deductibility of property taxes is a detailed process that can make a substantial difference in your tax bill and therefore also in your net income! Below is a high-level breakdown of the major tax areas by type and gives some insight into when they come into play in your strategy.
President Trump is poised to unveil his proposal to lower business taxes on corporations as well as pass through entities (S Corp and LLC) to a flat 15%. Details are sketchy at this point but the proposal likely faces an uphill battle to adoption. But let's consider what this reform, if adopted, could look like for you as a business owner or for the company that you work for and how it might impact your tax strategy.