subject: Why Are Tax Bills Always A Surprise: Planning For The Year Ahead [print this page] Most people are surprised to learn they have a tax bill after having their taxes prepared. There's nothing worse than paying taxes all year, only to find out you still have more to pay.
However, if you're careful about your tax planning, it is possible to reduce an impending tax liability and make sure you're more likely to receive a return rather than a bill.
The most effective tax planning measures are based on timing. If you get your timing correct, you could benefit from paying a little less tax than you originally expected.
You have several choices open to you if you're keen to reduce the likelihood of receiving a tax bill:
Voluntary Tax Contributions
Nobody likes the idea of paying more tax than they need to voluntarily, but it can sometimes be a way to prepay the amount of tax you may be liable for before it actually falls due.
Increase Super Contributions
If you haven't already, you may be able to increase the amount you voluntarily pay into your superannuation fund to increase your deductions and reduce the amount you might have to pay in tax.
Be careful that you don't pay too much into your super, or you may find you'll need to pay a higher tax rate on your contributions than you expected.
Purchase Small Business Equipment
If you were intending to purchase small business equipment in the first quarter of 2011, you might consider bringing those purchases forward. This is especially beneficial for purchases below $1,000, as these are immediately deductible.
Delay Invoicing
You may find that delaying your invoices for any goods or services provided in June until July can help to decrease your 2010 taxable income. This can also help to reduce the potential tax liability you're expecting.
Speak to a Professional
If you're not sure what else to try, your best port of call should be to speak to your accountant to ask what other alternatives you might have to reduce your potential tax bill before. Good tax planning advice can be an effective way to help reduce the amount of tax you're likely to pay.
by: Danny Smithwood
welcome to Insurances.net (https://www.insurances.net)
