Step By Step Tax Planning

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There are many responsibilities of an individual person, some are different than others, however, that does not mean that any of them are any less significant. Paying your due taxes one of those important jobs, however, that does not mean that you have to pay a large chunk of your hard-earned money simply on taxes.

In order to reduce the amount of tax that you have to pay one can always go for tax planning, even the planning done on a small scale can help you a lot in the long run. If you want to start planning your taxes in Chicago in order to reduce them then this article will be your step by step guide.

The first step is always to determine your gross total income or GTI, this way you can identify how much you earn in a year. Your gross total income includes income from any source that maybe your salary, profit generated from a business, income from a property, or income from any other source.

Once you have gone through the first phase the next step is to go for calculating your net taxable income. This will tell you the incomes on which you have to pay your taxes, net taxable income or NTI helps you in reducing your taxes. The sections which come under net taxable income include donations, investments in tax saving instruments, rent paid, the amount spent on handicapped individuals, etc.

It should be noted here that not all tax-reducing instruments are worth investing in so make sure that whenever you do, you invest in the right ones. Moving on, the third step is to compute the net payable tax. This way you will know just how much tax you have to pay yearly.