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What are some methods tax planners use to lower AGI or business income? Describe what the...

What are some methods tax planners use to lower AGI or business income? Describe what the tax planner might decide for an individual taxpayer, partnership, or corporation.

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Answer #1
  • Tax planning is the planning of a financial situation or plan to lower AGI or business income.
  • If an investment is sold at a loss, it can be used to offset other income.
  • Increasing retirement contributions is a method to lower AGI or business income.
  • Deductions for AGI provide the greatest benefit for the tax payer because it allows them to submit a lower AGI which could then allow for more deductions. For example student loan interest is a deduction for AGI.
  • Tax planning strategies for individual taxpayer include saving for retirement in an IRA and other retirement contributions.
  • In a partnership, partners are taxed on their share of income from partnership, hence the same tax planning applies to the partners as the individuals.
  • One of the most used methods in corporation is by including the deductions on business transport, health insurance of employees, etc.
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