The time to start your tax planning strategies is earlier in the year rather that later.
In Canada, and from what I read in the newspapers and online, most taxpayers worldwide feel that they are paying too much tax.

And to add insult to injury, most of the taxes paid are not being put to good use.
Almost daily, we hear about the misuse of some huge amount of tax funds gathered from taxpayers.

While it seems we can do little about these transgressions, we can use effective tax planning strategies that will help us minimize our tax liabilities.

Tax planning does not involve convoluted tactics to hide or reduce income.
These will get you into big trouble with your tax collector and are not worth the effort, especially when there are legal and more beneficial ways to keep more money in your pockets and away from the Taxman.

A very effective tax planning strategy is to make charitable donations.
In Canada, the Canada Revenue Agency allows tax payers to donate up to 75% of their income.
Which means your income for taxes would be on just 25% of your earnings.
A very effective tax reduction incentive!
However, not many tax payers can realistic afford to do this.

Many Canadian tax payers do make charitable donations in an effort to be philanthropic as well as to receive the resulting tax credits.

Beware! Not all charities are created equal and some are downright suspect.
At the very least a charitable organization should be registered and have a verifiable tax ID number.

Not all charitable organizations adhere to the strict guidelines that make a good charity program effective and sustainable even when challenged by the tax collecting agencies.

When looking at tax shelter programs (this is what these tax reduction strategies are called) it is important that you inquire about how the program deals with issues of “valuation”, “advantages”, and “impoverishment”.

Valuation:

In Canada, recent legislation has established rules that prohibit tax payers from receiving a tax credit for donating property at an appraised price that is higher than the property’s purchase price. Previously, donors were allowed to acquire property at a low price and gift it to a charitable organization, receiving in exchange a donation receipt at the higher appraised value.
Under the new legislation, the value of the receipt must equal the original purchase price of the donated item provided that this amount does not exceed fair market value.
Advantage:

The value of any “advantage” (personal financial benefit) that you might receive from making your donation must now be deducted from the value of your donation receipt.
For example, those donors who purchase a $200 charity golf tournament ticket and received dinner, drinks and course fees valued at $140, would only receive a $60 donation receipt.

Impoverishment:

To claim a tax credit for a donation, donors must demonstrate they are impoverished financially after making their donation.
In other words, donors must be “out of pocket” as a result of the transaction.

To make your charitable donation effective as a tax planning ensure that any program you choose is compliant in all these aspects.

There is no point in using tax planning strategies that will not stand up to scrutiny or worse yet, have you accused of attempting to circumvent the rules of compliancy.

Yvonne Finn invites you to come visit her website to learn how she can show you how to get back up to 90% of your annual income by using effective and CRA compliant tax shelters.

There are many different strategies that you should be aware of when creating your plan for wealth. Among those options should be a strategy that helps you minimize taxes on your income. Everyone has different income scenarios and no two tax strategies are exactly alike. Customizing the right tax plan begins with answering questions like: “What current tax laws exist?”, “Which ones affect me?”, and “How can I customize a plan to reduce the taxes that I may owe?”

Both individuals and businesses can benefit from a tax reduction strategy. Individuals benefit because they are able to reduce taxes on wages and other forms of taxable income. From a business perspective, the more after-tax income savings, the greater the profits a company will have to reinvest into operations. There will also be more profits available to distribute to owners and shareholders.

A tax plan is needed the moment there is income subject to tax. For many years, tax advisors have customized strategies to help wealthy taxpayers reduce their tax liability. However, there is a greater need for taxpayer literacy to show low-to-moderate income individuals how to benefit from tax saving options and how to apply these moves throughout the year for greater savings.

As with any plan there are certain results that it is designed to achieve. The major goals of a tax plan are to reduce taxes and keep more of the money that you earn as an employee, self-employed person, or investor. By having a road map to guide you, you can learn how to stop loaning money to tax authorities interest free. Consider the money you pay out in income taxes that is returned to you as a refund. Then take into account how much more effective it would be to have that same money available to you throughout the year. By using strategies to reduce taxes on income you can free up cash flow and have more money available for savings, investing, paying down debt, and to spend on things you enjoy throughout the year.

To get assistance with developing a tax plan seek the advice of a qualified professional. Some great places to start are with a tax advisor, accountant, or financial advisor that specializes in income tax. These experts will have the background necessary to look at your current income and customize a plan that fits your financial goals using various income and tax scenarios.

You should work with professionals who have a background in helping clients to create tax plans. This will ensure that you are getting the right counsel to help you achieve the results you desire.

As per EBRI.com, half of future retirees have saved less than $60,000, which may not be enough to last for years of your retired life. If you are interested to work in retired life, you need to do financial planning for retirement.

What are the 7 steps you need to follow?

1. Consult a financial planner and tax consultant. Maintain your monthly asset and liability. Plan to reduce expense with proper tax planning. I would suggest not taking any free consultancy. Ignorance is your worst enemy for investment. Spend money to educate yourself to invest wisely and smartly.

2. You need to know how much you’ll need to retire and start investment as early as possible. Time is the best advantage for wealth creation.

3. Ignorance is your worst enemy for investment. Spend money to educate yourself to invest wisely and smartly.

4. You might be contributing to pension fund like 401K throughout your life. Before retirement, try to take the entire invested fund and invest the same with maximum return. You need to consult wealth planner to execute the same.

5. Check your current debts and plan to move to low interest debt. While doing this, you need to consider your requirement for car, car maintenance, property tax etc. If you have a plan to travel, make a budget for that.

6. Check your insurance requirements. You might not require all those insurance. You should have proper medical insurance only.

7. Your retirement may last for 20 to 40 years so make the best of it. So, you should learn about new investment opportunities, plan to start a small business, which is most tax efficient. Always enjoy your retirement.

1. Widen your horizons

The expression, “don’t put all your eggs in one basket” is meaningful when it comes to investing. Don’t put all your money in one stock. Also, buy bonds, debentures and stocks. Don’t pick only one type of investment. Your portfolio must be diversified.

2. Examine the existing date

Obtain and analyze as much information as possible before making your investment decisions. This will provide you the basis for investment. And on the basis you would be able to take correct decision.

3. Establish your goals

Determine the price at which you’re willing to buy and sell. Analyze interest rates to decide what return you want. There are various types of investment where you can invest. For achieving the goals , you financial decisions must be based on your risk bearing capacity.

4. Higher the Risk : Higher the return.

If you want to have a higher returns you need to take higher risks. So if you can not afford to loss, do not invest beyond your limits.

5. Only Long term investments are good investments

Company stock prices will fluctuate, sometimes unfavorably, in the short-term. Invest for the long-term, but keep your current financial needs in mind. In long term, the market will repeat the history and you should wait for that.

6. Don’t take sudden decisions.

An impulse buy, whether at the mall or on the stock market, is still an impulse buy. Stick to your plan.

7. Tax Planning Is vital

Consider income-splitting techniques.

8. Focused assist

If you’re starting out, you must hire the best professional help . Professional advice will likely pay for itself within a short period of time.

There are many people who will look for even the tiniest deduction on their annual tax return but will not bother about minimizing the ultimate tax they might have to pay on their assets. This tax is estate tax. In order to minimize estate tax, you have to plan and this takes effort.

Most people are reluctant to think about estate tax planning because they are do not want to think about dying or they are simply clueless that estate tax will eat up a large portion of their estate.

When we talk about estate, it includes your home, personal investments, all pension plans, life insurance and annuities. If your estate is valued over $2 million, you will have to pay estate tax and that is why it is imperative that you spend time on estate tax planning.

Some of the popular strategies for estate tax planning are as follows:

o Credit Shelter Trust: If you use this way of saving estate taxes, your spouse will not have to pay anything when you die. The same tax benefit applies when the second spouse also passes away leaving the assets to the heirs. This means that you can put assets worth $2 million in credit shelter trust so that both your spouse and your heirs benefit from it.

o Gifting: You can lower your estate taxes by gifting but there are certain annual limits. You can gift just $12,000 a year to each person without incurring gift tax. This is done during your life time and you can do this annually so that your estate value decreases by the time you die.

o Insurance for liquidity: Smart planning reduces estate tax but does not necessarily eliminate it. Therefore, you should provide a way for your heirs to pay estate taxes, which has to be paid within nine months of your death. The best way to provide for this is through life insurance where the death benefit is large enough to cover the taxes. However, this is where prudence comes in. If you own the insurance, it will be considered as part of the estate. So, instead of having the insurance in your name, the policy can be owned by an adult child or by a life insurance trust that you can set up.