What is Pro-Active Tax Planning?
Pro-active means to prepare in advance for a known event. It also means to develop a course of action to achieve the most favorable outcome.
Most taxpayers depend on “information” they glean to run their business, manage their investments, increase sales and reduce expenses with the goal of making and increasing profits.
At the year end, you take your tax “information” to your tax professional, and they will prepare your tax return based upon that data. They will place the numbers in the correct spot on your tax forms and let you know the results. At tax time, your planning options are very limited.
By taking a “pro-active” approach to your taxes instead of “reactive” will have far better results.
William H. Rehnquist, Chief Justice of the United States Supreme court once said that “the law also recognizes that a taxpayer may structure a transaction in a manner that minimizes the tax consequences.”