As the year-end approaches, many people living in the U.S. start to wonder, “How much will I have to pay in taxes this year…?”
The truth is that this anxiety can be reduced by incorporating Tax Planning. And the foundation of effective tax planning is lowering your Adjusted Gross Income (AGI).
Why Is AGI Important?
AGI is the starting point for calculating taxable income, and it affects not only your tax bracket but also whether you qualify for various deductions and credits.
For example:
- Child-related tax credits
- Education-related deductions and credits
- Eligibility for the medical expense deduction
- Contributions to retirement accounts
All of these depend on the level of your AGI.
In other words, lowering your AGI can have benefits far beyond simply reducing your tax rate.
Why Waiting Until Year-End May Be Too Late
Many tax-saving strategies must be completed by December 31 of the tax year in order to be reflected in your return.
For example:
- Timing of business expenses
- Contributions to retirement accounts (for plans like 401(k), salary deferrals must be made by December 31. IRA contributions are allowed until the tax filing deadline of the following year, but planning ahead is always best)
- Using an HSA or FSA
If these actions cross into the next year, the tax benefits may be lost. That’s why it’s important to start preparing during the year, rather than scrambling at tax filing time.
Examples Introduced in My YouTube Video
In my YouTube video, I introduce some practical strategies such as:
- Expense management for business owners
- Using a Health Savings Account (HSA) to prepare for medical costs while reducing taxes
▶ [Watch the video here] (Japanese Only)
Summary in English:
This video explains how business owners can reduce taxable income by timing their expenses strategically, and how individuals can benefit from an HSA, which provides both medical savings and tax advantages.
Please note that these are only general examples. The most effective tax planning strategies vary depending on your individual situation — whether you are an employee, a business owner, have dependents, or operate under a specific business structure.
Personalized Tax Planning for You
At our firm, we:
- Review your prior year’s tax return
- Learn about your future plans and any concerns you may have
- Propose tax-saving strategies tailored to your specific situation
Many clients who have consulted with us have said, “I wish I had reached out sooner.”
Conclusion
Taxes are not something to deal with only at filing time — they require preparation throughout the year.
By focusing on ways to lower your AGI and adopting tax planning strategies that fit your situation early, you can approach year-end with confidence and peace of mind.
👉 If you’re wondering “What strategies work best for my situation?”, I encourage you to reach out sooner rather than later.
Hiromi K. Stanfield, CPA Inc.
Certified Public Accountant
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