Taxes are rising in many countries, and people everywhere are feeling the pinch. In the US, the average person spends around 3.5 months working to pay their yearly taxes. This means that from January 1st to April 16th, you are just offering “free labor,” and going by the current state of the economy, you might have to spend more days doing this. But there are strategies you can use to legally protect your income from taxes and even reach the coveted 0% tax level. According to the renowned tax advisor and strategist Karlton Dennis, it is not only possible to get your taxes close to or near 0%, but it is something that happens all the time, and there are perfectly legal and proven strategies you can use to do it.
These include increasing retirement account contributions to reduce taxable income, claiming tax credits, filing taxes on time, and understanding tax preparation and planning. Tax preparation and planning are two important steps that can help you save money by minimizing your tax liabilities.
Tax planning reduces tax liability, allowing for more flexibility in things like estate planning and distribution. Tax planning also gives you a better understanding of your investment returns. It enables you to know why a loss or gain occurred and what you can do better. Tax preparation, on the other hand, helps you maximize your deductions and tax credits, minimizes errors that can put you at risk for audits and penalties, and saves time.
But many people don’t know the difference between tax planning and preparation. Karlton explains that many entrepreneurs today pay thousands in taxes because they don’t have proper tax plans.
Karlton defines tax planning as effectively managing your financial situation to minimize the tax burden at a federal and state level for both the near and long term. This includes regularly self-reviewing your unrealized losses to determine whether it’s worthwhile and selecting tax strategies.
If working with a tax advisory firm, they will help you select tax strategies and analyze your tax savings report—a report detailing the tax savings generated from implementing selected tax strategies. Tax strategists and advisors can also help with tax preparation.
“Tax preparation is as crucial as tax planning, and knowing and understanding these two terms can help you save money,” says Karlton. He explains that for people looking to reach the 0% tax level, tax preparation enables you to avoid unnecessary interactions with the IRS. Tax preparation and working with a skilled tax expert reduces your chance of filing erroneous returns and helps you know where you are and what you can do to reach your goal.
Karlton has founded an online educational program, Tax Alchemy, which provides entrepreneurs with comprehensive tax education on various topics. He aims to make taxes easier for everyday people and help them learn how to take advantage of tax strategies to pay nearly 0% in taxes legally. Karlton Dennis has helped thousands through his program. He says he is looking to help many more as he breaks the norm of traditional accounting to show entrepreneurs the difference between tax preparation and filing and tax planning.
