Tax Planning

We are not tax professionals and we don’t prepare or file tax returns. However, we are well-versed in tax strategies and have helped numerous clients save thousands in taxes annually. We want to support you and your tax professional; helping you implement smart tax strategies to reduce the portion of your income lost to taxes. Below are some of the strategies we can evaluate for you:

• Roth vs. Traditional 401k & IRA Contributions
  • Deciding between a Traditional 401k and Roth 401k, or a pre-tax IRA versus a Roth IRA, can be confusing. We help clients decide with confidence by first understanding the pros and cons of receiving a deduction now vs. increasing tax-free assets.

• Roth Conversions
  • Depending on your income in a specific year, a partial Roth conversion can make a lot of sense and be a great way to provide tax-free assets to your heirs. We help our clients understand the tax ramifications of Roth conversions.
  • We also help clients choose when to do any conversions. If income is predictable, it could make sense to convert early in the year. If income is variable, a buffer may be needed for any possible scenario.

• Backdoor Roth Contributions
  • If your income is too high to make a direct Roth IRA contribution, we can review your situation to see if a Backdoor Roth contribution is a feasible strategy for you.

• Tax Bunching Strategies – Standard/Itemized Deductions
  • By strategically bunching expenses like charitable donations or state taxes into one year, you can maximize your itemized deductions. This approach has saved clients thousands by alternating between standard and itemized deductions.

• Tax-Efficient Charitable Giving
  • While the tax benefits of charitable giving should not be one’s primary motivation, they are a beneficial byproduct of giving. o If you have large unrealized gains in your portfolio, it may be wise to donate appreciated securities (rather than cash from your checking account) to help avoid capital gains tax while providing an equivalent benefit to charity.

• Donor Advised Funds (DAFs)
  • DAFs are often used as a tool for tax bunching. You receive the credit for the charitable donation when you contribute, but you control when the funds leave the DAF and go to charity.
  • DAFs are also used as a tool for highly appreciated holdings in brokerage accounts to help minimize (and sometimes eliminate) the taxes owed on the growth.
  • They can also help you gift non-cash assets (like real estate, business interests, or intellectual property) directly to charity.

• Qualified Charitable Distributions (QCDs)
  • If you are over age 70 ½ and have a balance in your IRA or tax-deferred account, then you can make Qualified Charitable Distributions (QCDs) directly from your investment account to charity. This type of distribution gets money to your favorite charity, satisfies the IRS rules for RMDs, and allows the tax benefits of a charitable donation even if you take the standard deduction.

• Tax-Efficient Withdrawals
  • Do you need money from your portfolio but don’t know the best place to take it from? We help clients identify which account(s) to withdraw from while keeping in mind the potential tax consequences of each withdrawal.

• Tax Loss/Gain Harvesting & Carry Forward Losses
  • We constantly review brokerage assets to take advantage of swings in the market regardless of market conditions. Tax losses can be used to partially offset income; while realizing gains can be a prudent strategy to allow for better diversification or realizing gains at a low tax rate.

• Income Tax Planning Strategies
  • Are you self-employed? Does a Solo 401k make sense for you?
  • Are you a high-income earner? Would municipal bonds make sense in your portfolio?
  • Are you close to IRMAA surcharge thresholds? Would you benefit from not realizing income or gains in a specific tax year?
  • Are you on subsidized health insurance? Would keeping your taxable income low help maximize the available subsidy?

Contact us to schedule your free initial consultation and learn how our tax strategies could help you.