“But I have a CPA do my taxes every year, I don’t need to worry about this.”
Your CPA is almost certainly very well versed on the state and federal tax regulations and is most likely an expert at completing your tax returns. As your financial advisor, the real difference is that we offer a more holistic approach since we’ll frequently have a broader view of your entire financial life. In other words, we often come up with tax-saving ideas because we’re able to see more pieces of the puzzle than your CPA.
Tax planning is unique for each individual scenario. Some basic examples that can lead to significant tax reductions for most clients are:
- Determine if income can be deferred to a later year.
- Evaluate whether shifting deductions from one year to another will be beneficial.
- Don’t sell your assets whenever you think about it – examine your investment portfolio so that the most advantageous timing of the sale of capital assets can be implemented.
- Bunching – analyze whether itemizing every other year and “bunching” your deductions will reduce your tax obligation.
- Determine whether the use of tax-exempt securities can reduce your taxes.
- Minimize the tax impact of required distributions from company-sponsored savings plans and IRAs.
- Assure that the taxes on Social Security benefits are not overpaid since the IRS says this calculation is the most common mistake made by seniors.