TAX PLANNING

Putting taxes in the context of your overall financial plan allows us to guide you in your decisions and the investments backing your plan. We help you understand how your income is taxed and at what rate. How does the standard deduction work? What about itemized deductions? Does a mortgage deduction really help? 

Taxes on capital gains and some dividends are often lower than taxes on ordinary income, depending on your stage in life and the source of your income. We look at all sources of income and factor in how they will affect your taxes, then invest — or liquidate — assets for the most efficient tax outcome.

For most people, 85% of their Social Security benefit is taxed. In certain cases, only 50% is taxed and in some cases the entire Social Security benefit can be tax free. To get the most out of your benefit requires careful planning to minimize the impact to taxes. We can run various income scenarios and show you how each will impact how your Social Security will be taxed.

Should you use a traditional tax deductible 401k or IRA or use Roth contributions?  Let us demonstrate the different impacts — now and in the future — between your pre-tax versus post-tax contributions. 

401k and IRA contributions can help reduce your taxes now with the idea of paying the taxes later in retirement when you may be in a lower bracket. Helping you determine whether to fund a 401k or an IRA, or both, is part of our planning discussion with you. 

A Roth conversion is the transfer of assets that occurs when you move money from a traditional retirement account into a Roth account. With a Roth conversion you will generally owe ordinary income taxes on the amount you convert, but the advantages may outweigh the extra taxes. We help you look ahead and understand the tax hit you may take now, in exchange for a future of no RMDs or a reduced RMD, tax-free withdrawals and the other more flexible options that Roth accounts offer.

While donations to charity are still tax deductible, with a higher standard deduction charitable contributions often do not reduce your taxes.  If you would like a guiding hand in developing a gifting strategy that uses creative, tax-efficient means of addressing your wishes, let us help.