Tax Planning

Tax Planning

Tax has a major impact on everyone living in the United States and even in other areas in the world. Almost every action or decision we make carry tax consequences. An individual who is not aware of tax laws or concepts does not consider tax when making a decision and how the decisions they make may affect their income. Different types of income received different types of tax treatment, some income are not taxed at all while others are taxed at a high or low rate. Income must be recognized before it is subjected to taxation of course, there are exceptions. The amount of taxes one pay can be avoided, minimized or reduced if planned properly. According the CPA Journal Tax planning involves reducing taxable income or reducing the effective tax rate. This can be done by taking into consideration how a particular transaction may affect a taxpayer ahead of time before making decisions. Taxes affect a broad range of individuals differently such as students, high-income individuals, low-income individuals, senior citizens, self-employed individuals, retirees etc. The primary focus in this paper will be the students, high-income individuals and the self-employed individuals.  
Some students do not have a job while attending school, while majority work and attend college full time and part time. Since students who do not have a job or source of income while attending school does not have tax liabilities the primary focus will be students who work while attend school and have tax liabilities. There are a wide variety of options available to students to reduced their tax liabilities, and even reduce or defer the cost of their education expense to some extent. Students can reduce their tax liabilities by either making a decision to attend school full time or part time. Of course whichever decision students make will have different effect on different students depending on factors such as how long the student has been attending college, the students income,... [continues]

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