CONSIDERING THE TAX IMPACT
Tax reduction planning is a critical component of wealth management. Such planning considers the implications of individual, investment, and business decisions, usually with the goal of minimizing tax liability. Working closely with our clients, we take into account the potential tax consequences our joint financial decisions have because unplanned financial transactions can result in recurring tax fees or large tax penalties. Although decisions are rarely made based solely on their taxable impact, we are always aware of the tax issues involved in any situation.
Income Tax Planning
A major goal of proactive tax planning is minimizing exposure to federal tax liability. While taxes are difficult to avoid, we proactively help clients reach their financial goals as tax-efficiently as possible. Depending upon a client’s unique circumstances, some of the tax planning strategies we may consider include
- Income tax bracket use strategies
- Deferral or shifting strategies
- The use of health and medical savings accounts
- Tax-loss harvesting
- Year-end planning
- Review of capital gains or losses
- Planning for deductions and credits
- Review of cost-basis
- Roth conversions
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Life Event Planning
Life patterns may be expected or completely unpredictable. All the events that occur within a lifetime are important factors that can greatly affect one’s financial situation. Some significant financial events like retirement, marriage, divorce, illness, inheritance, disability, children, sale of a business, and purchase of a dream home or vacation property come with tax considerations, which may affect the stages of an overall investment plan. Relative to income tax planning, life event planning focuses on the impact of these critical financial events.
Investment Tax Planning
Investment tax planning typically involves evaluating how to best position assets to minimize ongoing tax payments. This strategy generally requires year-round planning and begins with an in-depth understanding of the tax implications of various investments and investment strategies.
Gift Tax Planning
Giving away wealth, during life or at death, may incur deferral or additional state taxes. We help clients protect the assets they transfer against excessive depletion from gift, income, and inheritance taxes by applying a variety of strategies to minimize them.
Business Tax Planning
Many of the decisions business owners make will be tax-based—from the initial setup of the business to its operations, and through its ultimate sale. The choice of business entity, how profits are paid out to owners, and the accounting decisions will all have an effect on tax liability. We consider a variety of tax options that could lead to a significant reduction in the taxes business owners pay, which means more money can go into growing the business.
Although financial professionals can perform many tax planning functions, it is important to note that some activities require the expertise of an accountant or a CPA.
