Tax Planning

Taxes are a necessary part of life, but they don't have to be a burden. Get tips and information to help you reduce the amount of taxes you pay, and optimize the deductions and credits available to you.

Frequently Asked Questions

  • Why is tax planning important?

    The idea behind tax planning is to arrange your financial affairs so you ultimately end up owing as little as possible in taxes. You can do this in three ways: You can reduce your taxable income, increase your deductions, and take advantage of tax credits.

  • How do you do year-end tax planning?

    Year-end tax planning is the practice of trying to maximize tax returns, avoid tax penalties, and make the most of any possible tax deductions. While this can take place at any time during the year, there are last-minute strategies that taxpayers can implement. These include withdrawing from or contributing to a retirement account to take advantage of tax-free withdrawals, and converting a traditional IRA to a Roth IRA to take advantage of a lower tax rate. 

  • When can you start filing taxes?

    The IRS began accepting and processing 2021 tax returns on Jan. 24, 2022. The IRS typically begins accepting returns sometime during the last week of January. Employers normally have until Jan. 31 to send W-2 and 1099 forms to report employees’ earnings.

  • How do you estimate taxes for retirement planning?

    Your tax rate in retirement will depend on the total amount of your taxable income (i.e. Social Security, investment income, pension, traditional IRA, 401(k)) and your standardized or itemized deductions. List each type of income and how much will be taxable to estimate your tax rate. Add that up, and then reduce that number by your expected deductions for the year.

Key Terms

A couple sits at a table, discussing whether they need to file Form 8862 with a tax preparer
Form 8862
A woman tries to file her taxes while her boyfriend relaxes on the couch behind her
Form 1099-G
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What Are Back Taxes?
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What Is a Premium Tax Credit?
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Estate Taxes and Inheritance Taxes Aren't the Same Thing.
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Limited Liability Corporation (LLC)
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What Is the FICA Tax?
H&R Block
Is H&R Block the Best Choice for Preparing Your Taxes?
A couple does taxes together.
Income Tax
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Employer Identification Number (EIN)
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A Review of the OnLine Taxes Free File Software
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Nonprofit Organization (NPO)
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Homestead Exemption
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Tax Return
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What Is a Dependent?
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What Are Taxes?
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Taxable Income
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Direct Tax
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What Is the Difference Between Gross Income and Net Income?
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Taxation Without Representation
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Indirect Tax
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Tax Incidence
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How Much Is Severance Pay Taxed?
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Can You Deduct Legal Fees on Your Personal Taxes?
The 9 Community Property States of the U.S.: Washington, Idaho, Nevada, California, Arizona, New Mexico, Texas and Louisiana. Married couples who live in community property states jointly own their marital property, assets, and income.
Marital Taxes in Community Property States
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What You Need To Know About Cash App Taxes
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Property Tax
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How To Make Sure You Qualify and Get Your Child Tax Credit
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How To Calculate Mileage Deductions on Your Tax Return
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C Corporation
A couple prepares their taxes at home.
Principal Residence
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What Is Form 1099-DIV?
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Sales Tax
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Tax Expense
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How Much Can You Save in a 403(b) Retirement Plan?
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Form 1099-INT
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Form 1099-A
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Exempt Income
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What Is Tax-Deductible Interest?
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Tax Shield
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Tax Evasion
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Use Tax
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Tax Benefit
Your inheritance may be affected by an inheritance tax (property), capital gains tax (proceeds from sale of inherited property), or an estate tax (tax on property value) Only six states collect inheritance taxes No need to report an inheritance on taxes, but some properties come with tax consequences Capital gains tax affects the difference between the value of an asset and the amount you sell it for Consult with an estate planning attorney if you’re unsure about how taxes will affect your inheritance
Will You Have to Pay Taxes on Your Inheritance?
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What Is a Land Value Tax?
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Are Tips Taxable? Here's What You Need To Know
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Tax Code
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Tax Withholding
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FreeTaxUSA Free File Edition
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What Is a Cafeteria Plan?
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Tax-Free Savings Account
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Is Short-Term Disability Taxable?
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Transfer Tax
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What Is Tax-Exempt Interest?
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Schedule A of Form 1040
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Form 1095-C
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Annualized Income
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An Easy Way to Calculate Your Estimated Taxes and Possible Penalties
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Tax Base

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