Definition of Tax planning:
Exercise undertaken to minimize tax liability through the best use of all available allowances, deductions, exclusions, exemptions, etc., to reduce income and/or capital gains.
Tax planning is the analysis of a financial situation or plan from a tax perspective. The purpose of tax planning is to ensure tax efficiency. Through tax planning, all elements of the financial plan work together in the most tax-efficient manner possible. Tax planning is an essential part of an individual investor's financial plan. Reduction of tax liability and maximizing the ability to contribute to retirement plans are crucial for success.
Tax planning covers several considerations. Considerations include timing of income, size, and timing of purchases, and planning for other expenditures. Also, the selection of investments and types of retirement plans must complement the tax filing status and deductions to create the best possible outcome.
How to use Tax planning in a sentence?
- Considerations of tax planning include timing of income, size, timing of purchases, and planning for expenditures.
- Tax planning is the analysis of finances from a tax perspective, with the purpose of ensuring maximum tax efficiency.
- Tax planning strategies can include saving for retirement in an IRA or engaging in tax gain-loss harvesting.
- The companys routine charitable donations were a part of the tax planning as the donations would count as a deduction on their taxes at the end of the year.
- The new accountancy firm guaranteed they could significantly ease the corporations tax burden through smart tax planning by applying some foresight.
- We had to do some tax planning so we would be ready for tax season and not mess anything up this time.
Meaning of Tax planning & Tax planning Definition