This post is inspired by a social media post I read this morning by a person purporting to be searching Facebook for tax saving vehicles for teachers. The topic of tax planning for teachers is not within my target business marketing strategy but I’m writing this short blog post to illustrate a point; how the approach to effective tax strategy is developed independently and quite differently from searching on Facebook after the fact. While I do have two teachers as individual clients (not tax or financial planning) and two educational organizations that employ teachers, this subject certainly isn’t a mainstream topic of conversation for me.
Three well proven strategies (but certainly not the only strategies) for reducing income taxes for teachers are:
- Accountable expense reimbursement expense plans – amounts paid to teachers this way are not taxable income.
- Qualified employee benefit plans – a wide range of programs offer tax advantages.
- Tax exempt entities – there are many ways that teachers can use their own or a larger tax exempt entity to their advantage in saving taxes.
The one thing that all of these strategies have in common is the need for significant advance planning work; sometimes in coordination with government or other entities. Nobody said saving taxes is easy or simple. Also, nobody said that saving taxes was worth the effort it takes. All I am saying is that reducing taxes certainly is possible and that some teachers do it well. Will it work for a specific case? Only discussion with that individual will provide the answer.
None of these strategies involves waiting until after the year ends and saying “What can I do to reduce taxes last year?” That’s my point. If you want to reduce taxes, you must commit to strategies long in advance.
I am happy to discuss your own tax planning either as a individual or as a business that employs individuals who might benefit from income tax savings.