Week 7 - Summary

Module Seven Executive Summary Author’s Name Institutional Affiliation Course Code and Name Professor’s Name Date Module Seven Executive Summary Common Tax Strategies for Reducing Taxable Income Lowering or reducing the taxable income is a common aspect in financial planning issues among business owners and individuals. Several strategies can be used to reduce taxable income. The first strategy is through funding or increasing one’s funding into retirement accounts (Toder et al., 2020). Several retirement savings plans exist for those who are self-employed including a plan such as Simplified Employee Pension (SEP) and Individual Retirement Accounts (IRAs) which are great strategies for lowering taxable income since they allow for higher contribution limits through pre-taxation contribution. The second strategy is home office deduction whereby the taxable income is reduced by using a portion of one’s home as a dedicated office. This works because a home office deduction is calculated by a regular or a simplified method reducing the taxable income. Taking a long list of business deductions is another strategy of reducing taxable income for employers. Health savings account (HAS) is also another strategy that provides an opportunity for pre-tax contributions for healthcare costs reducing the taxable income. Additionally, one can consider Employer-Sponsored Plans including 401 (k) and 403 (b) which allows pretax contributions through paycheck deferrals reducing the employer’s taxable income. Summary of the IRS Adjustment for Resolution Process Taking ...