7 Tax Planning Tips for Missouri Residents

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7 Tax Planning Tips for Missouri Residents
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(1) Know Your Filing Status

• With tax season coming up, its important to get
  started on your taxes as soon as possible and
  take advantage of the time you have now. If
  youre in Missouri, here are seven tax planning
  tips that will help you lower your tax bill this
  year and help free up more of your income to put
  towards other things next year. Dont wait until
  the last minute, or you could end up paying more
  than you need to!

The first step in tax planning is knowing your
filing status. This is because your filing status
determines which tax bracket you will fall into
and how much tax you will owe. For example, if
you are married and file a joint return, you will
usually have a lower tax liability than if you
were to file as a single. There are five main
filing statuses single, head of household,
married filing jointly, married filing
separately, and widow(er) with dependent child.
Single filers include anyone who isnt married
and doesnt qualify for any other filing status.
Head of Household filers typically live with a
qualifying person but dont meet the age
requirement to be classified as an Elderly or
Disabled Single Taxpayer (i.e., someone who is 65
years old or older). Married Filing Jointly
filers are spouses who want to combine their
incomes and their tax liabilities.
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(2) Maximize Your Deductions

• One way to save on taxes is to maximize your
  deductions. If you own a business, be sure to
  deduct business expenses like office supplies and
  mileage. You can also deduct charitable donations
  and medical expenses. If you have a home office,
  you may be able to deduct a portion of your rent
  or mortgage interest. Talk to your accountant
  about other deductions you may be eligible for.
  For example, if you are retired, you might want
  to explore the benefits of tax-deferred
  retirement accounts such as IRAs or 401(k)s.

(3) Check Out The Standard Deduction Amount
The first step in tax planning is to check out
the standard deduction amount. The standard
deduction is a set amount that you can deduct
from your income. For Missouri residents, the
standard deduction is 5,000. This means that if
you have an income of 50,000, you would only be
taxed on 45,000. Even though this is helpful, it
may not make sense for every person or family.
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(4) Document Other Expenses

• You should also consider whether or not itemizing
  deductions will be beneficial and compare the two
  options before deciding what works best for you.

1. In addition to documenting your income, youll
also want to keep track of any other expenses
that could be tax deductible. This includes
things like business expenses, charitable
donations, and medical expenses. 2. Keep in mind
that not all expenses are created equal when it
comes to taxes. For example, business expenses
are generally more tax deductible than personal
expenses. 3. When in doubt, its always best to
consult with a tax professional to see if an
expense is tax deductible. 4. The IRS has
published a list of deductions that can be
found. 5. You can read more about the rules for
deductions. 6. Keep in mind that you dont have
to take the standard deduction! If you have
substantial itemized deductions, taking the
standard deduction may end up costing you money!
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(5) Keep Close Track Of Sales Taxes

• In Missouri, the state sales tax is 4.225
  percent. Thats in addition to any local sales
  taxes, which can range from 0.5 percent to 2
  percent. So if youre selling products or
  services in the state, its important to keep
  close track of your sales taxes. Here are a few
  tips to help you out
• 1) If youre self-employed and sell goods or
  services in Missouri, report your income and
  business expenses on Schedule C.
• 2) If youre an employee and receive income other
  than wages, such as bonuses or commissions, use
  Form 1040EZ.
• 3) Use Form 8917 to figure the tax on
  non-qualified deferred compensation items that
  arent subject to Social Security and Medicare
  taxes.
• 4) Your employer may withhold federal income tax
  at a different rate than what youll owe when you
  file your return.
• 5) You may need to make estimated tax payments
  during the year if these three conditions apply
  You expect more than 1,000 in tax deductions and
  credits this year You dont have enough
  withholding (income tax taken out of each
  paycheck) Your withholding plus expected tax
  credits equals less than 90 of your total
  estimated 2018 tax liability.

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(6) Look Into Tax Credits

• As a Missouri resident, you may be eligible for
  certain tax credits. Doing some research and
  consulting with a tax professional can help you
  take advantage of these credits and save money on
  your taxes. One credit that may apply to you is
  the Earned Income Tax Credit (EITC). In addition
  to the federal tax credit, many states offer
  their versions of this credit. A tax professional
  can determine if this applies to you and if so
  will guide you through the process. Another tax
  credit available in Missouri is the Homestead Tax
  Credit which provides property tax relief for
  homeowners who are at least 65 years old or have
  disabilities.
• Another great way to plan for your taxes as a
  Missouri resident is to use estimated payments
  throughout the year instead of waiting until
  April when its due. If you make monthly
  estimated payments, youll only need one large
  payment instead of 12 small ones in April.

(7) Choose The Right Retirement Plan
When it comes to tax planning in Missouri, one of
the most important things you can do is choose
the right retirement plan. There are a few
different options available, and each has its own
set of pros and cons.
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• Youll need to consider your financial situation
  and goals before making a decision, but here are
  a few things to keep in mind A 401(k) provides an
  employer match, which could be worth as much as
  25 on top of what you put in yourself. It also
  offers pre-tax savings that could help lower your
  tax bill.
• A traditional IRA gives you tax-deferred growth,
  which means that any earnings will not be taxed
  until theyre withdrawn at retirement age when
  theyre no longer subject to taxation.
• A Roth IRA offers tax-free withdrawals once you
  reach retirement age if certain criteria are met.
  But you must pay taxes on all contributions made
  beforehand. If this is something youre willing
  to take on, then the benefits could make up for
  it over time.
• Be Aware of Tax Brackets One key point in tax
  planning Missouri residents should know about is
  how income brackets work. Your tax bracket
  defines how much tax youll owe on every dollar
  earned until your income reaches the next bracket.

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