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Assume you are a single taxpayer. If you expect your marginal tax rate to increase next...

Assume you are a single taxpayer. If you expect your marginal tax rate to increase next year, provide two tax planning strategies that you could employ in the current year?

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Expert Solution

As an individual tax payer when I expect that my marginal tax rate will increase in the next year , I would follow the below mentioned tax planning strategies to be followed in the current year.

1. Firstly I would take a housing loan and buy a house using the same in such a way that I'll be benifited from tax point of view and not only that but I will be holding an asset after all the installment payments by which I can save the amount of tax burden to be paid by me due to the increase in marginal rate of tax.

2. The second method is that by giving donations to the authorised institutions in such a way that I could get full exemption under the respective sections from paying the taxes on the income earned and also there are some situations in which we'll be allowed to take double tax benefit when we give donations to few specified institutions and the doing so we can avail the double tax benefit allowed by law.

ekkarill92 answered 1 year ago
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