Taxes are unavoidable, but you can minimize the impact they have on your bottom line. Every scenario is different, of course, but one thing is universally true: “Planning is the key to taxes,” says Carol W. Thompson, a tax professional in the Portland, Maine, region. “If you don’t plan, then you’re not going to get anywhere.”
It's also important to understand that taxes are not based on your gross income, but rather on a "taxable income" that can be reduced by deductions or "write-offs." While people with many deductions will itemize them on their tax returns to maximize their refund or lower the amount of taxes they must pay, those without a lot of write-offs will use the standard deduction provided by the government to calculate the tax. Either way, the result is that your taxable income will be lower than your gross income – which means you’ll pay less in taxes.
"Planning is the key to taxes. If you don’t plan, then you’re not going to get anywhere."
- Carol W. Thompson, federally licensed tax professional