Tax Planning as a Service

Most people just think of taxes when returns are due. That’s probably because most accountants and other financial professionals don’t offer much else. Tax planning is a specialty. It’s also an incredibly important issue to consider for wealth building success.

There are lots of different applications for a tax planning professional. It ranges from careful and calculated steps for long term wealth building to panic button moments where today’s decision could have a big impact on taxes owed tomorrow. Sure, it’s great if you can know in advance what you’ll do in every circumstance, but life doesn’t always happen that way. Good tax planning consultants are not only there for retirement strategies, but are also available when you need input on now decisions that could be costly if not structured carefully.

Don’t think you don’t make enough money to make tax planning necessary? Lifestyle focused people can often benefit the most from engaging professional help to reduce tax liabilities. If you want your money to work for you so you can enjoy your life now and in the future, taxes matter.

What does a tax planner do?  

Tax planning has a big picture focus. It looks at all the financial pieces of your life to reduce taxes owed. Those who provide this service must be familiar with tax code, current tax regulations, your cash flow picture and goals, and your investment holdings. With this information, they’ll help you determine how to best make the amount of income you lawfully report as small as possible while also considering how to best invest your money to reduce taxes owed now and in the future.  

This is different from tax preparation in that your tax planner creates short term and long-term strategies to minimize what you’ll owe Uncle Sam and, where appropriate, the state you live in. It considers issues and solutions year-round. You can’t walk back decisions that result in high capital gains liabilities after the year is through.  

Effective tax planners need to know current tax laws, be aware of laws and regulations being considered, and familiar with how this may affect your current and future tax exposure. Without stepping out of the bounds of the law, they creative with solutions to help you find strategies for paying the lowest possible amount in taxes.

Why consider hiring a tax planning professional? 

Most people don’t get excited about paying taxes. Finding ways to owe less can be a bit of a thrill, though. Specialized tax planners look at both potential income tax and capital gains as well as wealth tax scenarios. This happens all year long, and considers everything from tax credits to tax loss harvesting. It’s particular applicable to business owners with pass through entities, but can also apply to individuals and families who have accumulated a little wealth or bought investment properties.

Estate planning isn’t a once and done event. Setting aside money for your heirs may be part of your goal, but there should be more thought put into how you do it. Sometimes what you think is a kindness will make a relative’s taxes a lot harder to manage. Tax planning can make sure you gift in a way that lowers both your recipients tax liability and yours.

A tax planning professional also understands how investment returns, varying annual expenses and inflation can impact your savings. Making adjustments for this as circumstances change can help protect or expand your wealth.   

Tax loss harvesting can be a big deal. Where this is particularly applicable is taxable investment accounts. Have a non-qualified brokerage account where you have people moving your money around to maximize growth? Each move can be taxed for the gain. If you’ve had a loss for the year, you can still owe money to Uncle Sam. That’s where the fourth quarter tax loss harvesting comes in. But if you wait that opportunity is gone. Tax planners make sure things like that don’t happen.  

Get clear on the small stuff

Little increases in capital gains, wages or other income can make a big difference in your tax bracket. There are ways to offset income. Maybe you have items for your side gig you haven’t thought to expense? Have an expert tax strategist look at all your finances can help uncover ways to manage your money for lower tax obligations. 

How charitable contributions can be handled has changed a lot in recent years. If your goal is to live a legacy for an organization or a cause, it’s important to understand how doing so can impact your tax picture – and theirs. A qualified tax planning professional can provide options you may not have considered.

Personally, I like a challenge. Call me before you hit the panic button or when you think there’s no way out of a sticky situation. Spend an hour with me and $250 before you make a decision that could cost you much, much more. Of course, if you’re not a current client and it could wait until after tax season, I’d be grateful.  

Photo by Jon Tyson on Unsplash