Types of tax planning pdf

Discuss the objectives, importance and types of tax. Learn vocabulary, terms, and more with flashcards, games, and other study tools. Use taxdeferred growth socalled defined contribution plans provided by employers, such as 401k or 403b plans. Tax planning entails creating portfolios or circumstances that are as tax efficient as possible. By taking this training, you are taking an important step to building a better business. Different types of financial planning models and strategies. A brief overview of business types and their tax treatment congressional research service 2 and third, there have been off and on discussions about moving to a more uniform business tax environment.

Almost every type of salary, or remuneration of every kind of. If you want to keep more of your income, managing your investments with tax efficiency in mind is a must. Overview of concepts, theories, restrictions, motivations and approaches article pdf available in mediterranean journal of social sciences december 2015. By spreading your investments among different types of products stocks, bonds, cash equivalents, etc. Read this article to learn about the importance of planning for an organization. The objective behind tax planning is insurance of tax. It helps in effective cash flow and liquidity management for taxpayers and better retirement plans and investment opportunities. The tax planning exercise ranges from devising a model for specific transaction as well as for systematic corporate planning. The goal of all tax planning strategies is to minimize an individuals or business total tax liability for the year while also meeting personal or business financial goals. Tax planning of fringe benefits high rates of tax have lead employees and employers to appreciate the critical role of fringe benefits in structuring salary packages. The income tax law itself provides for various methods for tax planning, generally it is provided under exemptions us 10, deductions us 80c to 80u and rebates and reliefs. A wealth tax is a levy on the total value of personal assets, including. Tax planning involves planning your income in a legal manner so to avail. Keep more of your money with taxefficient investments.

As it is clear from the above discussion, plans have two. Visit for the latest tax and financial planning ideas from putnam. Feb 27, 2012 what type of estate and tax planning do i need to do. All organizations whether it is the government, a private business or small businessman require planning.

In other words, it is the analysis of a financial situation from the taxation point of view. This requires investors and companies to give consideration not just to the size of their incomes or profits, but also to the nature and timing of purchases, insurance coverage and the types of investments they make. Tax planning is the analysis of a financial situation or plan from a tax perspective. Tax planning is minimizing your tax liability by making the best use of all available deductions, allowances, rebates, thresholds, etc as permitted by income tax laws, rules stipulated by the government of a country. In the matter of taxation of salaries, the law of income tax has recently been made comprehensive. Tax planning meaning, types importance of tax planning. Put simply, it is an arrangement of an assessees business or financial. The focus in 2018 was on changes affecting income taxes for individuals, business owners, and corporations as well as changes affecting estate taxes. An investment with 5 year lock in, like ulips serve the need of tax saving for all those 5 years and eliminates renewed planning. To turn their dreams of increase in sale, earning high profit and getting success in business all businessmen. Tax planning and tax management is what all wants currently every day, as on one hand none wants to pay a lot of tax and on the opposite hand none wants to evade the tax because the implications ar strict. Also, the selection of investments and types of retirement plans must complement the tax filing status and deductions to create the best possible. It will help you to utilise the tax exemptions, deductions, and benefits in the best possible way for minimising your tax burden.

Objectives of tax planning tax planning, in fact, is an honest and rightful approach to the attainment of maximum benefits of the income tax law within the framework. Smart tax planning happens all year long, not on the last day of the year or the day before your taxes are due. Typically liabilities primarily mortgages and other loans are deducted, hence it is sometimes called a net wealth tax. Tax planning is a legal way of reducing your tax liabilities in a year. Contingency planning can be helpful in circumstances that call for a change. Taxes are generally an involuntary fee levied on individuals or corporations that is enforced by a government entity, whether local, regional or national in. This report will look at ways to increase your deductions, reduce your income and find ways to take advantage of various tax credits. On the other hand, the tax avoidance is a technique of refraining from tax liability, through just and fair means, but intends to defeat the fundamental motive of the legislature. Tax planning can be understood as the activity undertaken by the assessee to reduce the tax liability by making optimum use of all permissible allowances, deductions, concessions, exemptions, rebates, exclusions and so forth, available under the statute. Any reasonable project manager certainly understands importance of planning a project well. Changing your llc tax status to a corporation or s corp. Overview of planning toolkit on overview of planning by janet shapiro email. Investment plans, retirement plans, tax plans, business planning, personal. Is your hobby a business, or is your business a hobby.

It should enable the user to make a clear distinction between. Pdf tax planning is a legitimate right of a taxpayer so long as it is pursued. Tax planning involves planning in order to avail all exemptions, deductions and rebates provided in act. The basics of project planning introduction before commencement of any project, the first thing that we need to do is project planning. Discuss the objectives, importance and types of tax planning. Tax planning lets you take advantage of changes the irs makes. Dec 06, 2019 taxes are generally an involuntary fee levied on individuals or corporations that is enforced by a government entity, whether local, regional or national in order to finance government activities. Tax planning is an activity conducted by the tax payer to reduce the tax liable upon himher by making maximum use of all available deductions, allowances, exclusions, etc. While this works on occasion, effective tax planning requires that you allow for time to study the situation and make the appropriate decisions. This is a short 43 slide power point presentation in pdf which covers all the tax saving sections and investments applicable for tax payers. Every day in september we will be posting a brief how to tax tip to enable you to understand a little more about tax and hopefully pay less tax as well. Effective tax planning strategies are used to minimize taxes. The importance of taxefficient investing schwab brokerage.

Plans are classified into various categories in number of ways on the basis of their functions and frequency of use and the time horizon. Tax planning is the analysis of ones financial situation from a tax efficiency point of view so. The difference between tax planning and tax avoidance can be drawn clearly on the following grounds. Tax saving is a recurring need, one which has to be carried out year on year. Another approach adjusts forwardlooking parameterbased metr and aetr to capture the effects of various forms of. We are releasing the ebook on tax planning which tells you how to save income tax for fy 201819 ay 201920 for both salaried and professionals. Without a will, your assets could be held in probate court and distributed according to state law. What is planning and its nature, importance, and types. With the 2016 tax filing deadline upon us, its a great time to plan ahead and implement your 2017 tax management strategy. After a year, people have moved from how does the new.

Hence, the objective of tax planning cannot be regarded as offending any concept of the law and subjected to reprehension or reducing the inflow of revenue to the. How to understand the four types of tax planning one. Identify the federal, state, and local taxreporting requirements of a small business and its owner, and establish a plan to account and paythem. The purpose of tax planning is to ensure tax efficiency, with the elements of the financial plan working. Pdf on may 10, 20, savita balhara and others published income tax planning. Moreover, we provide basic concepts of tax planning and discuss different types of decision settings and planning approaches. To turn their dreams of increase in sale, earning high profit and getting success in business all businessmen have to. Difference between tax planning and tax avoidance with. Financial is a very broad concept and planning is a difficult and disciplined mission.

Another approach adjusts forward looking parameterbased metr and aetr to capture the effects of various forms of. Planning involves determining various types and volumes of physical and other resources to be acquired from outside, to allocate these resources in an efficient manner among competing claims and to make arrangements for the systematic conversion of these resources into useful outputs. Tax planning refers to a mechanism through which one can intelligently plan hisher financial affairs in such a manner that all the eligible deductions, exemptions and allowances, as per law, can be enjoyed. Mar 31, 2020 tax planning is the analysis of a financial situation or plan from a tax perspective.

The dividing line amidst the two concepts is thin and blur. Types of plans in management pdf principles of management. What type of estate and tax planning do i need to do. A brief overview of business types and their tax treatment. In your 2017 planning, youll need to follow current tax law with an eye on what could happen in the future and be ready to act quickly if changes should warrant it. Jan 29, 2018 tax planning and tax management is what all wants currently every day, as on one hand none wants to pay a lot of tax and on the opposite hand none wants to evade the tax because the implications ar strict. Jul 07, 2017 business experts sometimes refer to these plans as a special type of planning. Download complete tax planning guide in pdf for salaried.

Retirement planning guide esl federal credit union. Mar 29, 2020 the goal of all tax planning strategies is to minimize an individuals or business total tax liability for the year while also meeting personal or business financial goals. Tax planning involves conceiving of and implementing various strategies in order to minimize the amount of taxes paid for a given period. Tax planning and reporting for a small business participant guide small business financial education curriculum page 3 of 18 welcome welcome to the tax planning and reporting for a small business module. Feb 25, 2020 the idea of tax planning is to arrange your financial affairs so you ultimately end up owing as little in taxes as possible. But by starting to think about these types of things, you can begin to build a plan for your retirement around those goals. Meaning of tax planning tax planning involves planning in order to avail all exemptions, deductions and rebates provided in act. Sep, 2019 while this works on occasion, effective tax planning requires that you allow for time to study the situation and make the appropriate decisions.

Individuals should seek independent tax advice regarding their circumstances. Continuity in tax savings avoids the need to rethink your investments every year and hence devote time to other pursuits. What are the different types of tax planning strategies. Tax planning is a process of analyzing ones financial situation logically with a view to reducing tax liability. The idea of tax planning is to arrange your financial affairs so you ultimately end up owing as little in taxes as possible. P l a n n i n g tax planning calculating your taxes 1 salary, parttime wages, investment income, rental income and gross income alimony received, etc. The definition of taxes, types of taxes and tax rules, types of progressivity of taxes oecd 1996, definition of taxes, daffemaieg2963. Planning is a complex process that can take many forms. Although managers should anticipate changes when engaged in any of the primary types of planning, contingency planning is essential in moments when changes cant be foreseen. There are different kinds of planning and different ways of planning.

Get a sales tax certificate for a sales tax exemption. How to understand the four types of tax planning one accounting. Some key categories of financial planning includes source of finances, assessment of your financial necessities, calculating the risk factor and a plan to achieve your financial goal. Whats more, tax efficient investing techniques are accessible to almost everyoneit just takes some planning to reap the benefits. You can reduce your income, increase your deductions, and take advantage of tax credits.

The tax consequences of these types of compensation can be complex subject to ordinary income, capital gains, employment and other taxes. According to traditional economic theories of taxation there is no reason why otherwise identical businesses should be taxed differently. Investment plans, retirement plans, tax plans, business planning, personal financial planning are some of the subtypes. There could be major incentives to defer income to 2018 and accelerate deductions into 2017. The difference between tax planning and tax avoidance primarily depends on the difference in benefits that are availed to minimise tax burden. For a small business, minimizing the tax liability can. Tax planning can be understood as the activity undertaken by the assessee to reduce the tax liability by making optimum use of all permissible allowances, deductions, concessions, exemptions, rebates, exclusions and so forth, available.