Maximizing Your Wealth: Strategic Tax Planning & Financial Advisor Guidance
Tax planning is important for managing wealth, but it can be complex, especially for those with complicated returns. It's crucial to reduce your tax burden effectively. Careful planning can help minimize your tax liability leaving you with more money to further your financial goals.
Tax planning isn’t just something you think about when filing, it requires year-round attention if done properly. Your accountant is important, but also consider a financial advisor for tax-efficient investment strategies. They can help you make smart financial decisions.
What is tax planning?
Tax planning involves examining your overall financial situation to find ways to reduce the amount of taxes you owe. This process includes considering your income, expenses, investments, and strategies to save on taxes. Plan your taxes carefully to reduce how much you owe and keep more of your money in your pocket. This includes planning around your income, spending, investments, and tax-saving strategies.
Strategic tax planning can also help maximize your estate and provide more flexibility for your heirs. For example, as part of your tax plan you might hand off portions of your wealth to family members as tax-free gifts or establish an irrevocable trust to reduce the federal tax burden for those who inherit your estate.
How can a financial advisor help?
As part of an overall plan to manage your wealth, many financial advisors will offer tax planning services, which may include:
Charitable giving strategies: The amount and timing of charitable giving can have an impact on your tax bill. A financial advisor can help you decide when and how much to donate. This can help you lower your taxable income by making charitable contributions. An advisor may help you time gifts to charity so deductions can offset other big taxable events, like a financial windfall, a salary raise, or a large bonus at work.
Tax-loss harvesting: An advisor can help you decide when to sell investments that have lost value to reduce taxes. This is done by using capital losses to offset taxable gains.
An advisor can provide guidance on the best timing for selling these investments. This can help you minimize your tax liability. Your advisor can help you use proceeds from the sale to reinvest in similar securities with upside potential.
Choosing tax-efficient investment vehicles: A strategic tax plan will consider the impact of contributions to tax-deferred savings accounts like 401(k)s, 529 education plans, and health savings accounts (HSAs). Some plans, such as 401(k)s, IRAs, and HSAs, help you lower your taxable income right away.
Contributions to 529 plans aren’t tax deductible, but investments inside the account grow tax-free. Withdrawals made to cover qualified education-related expenses are tax-free as well. A financial advisor can help you plan contributions to tax-deferred accounts to minimize what you owe in taxes.
Multi-Year tax planning: The most effective tax plans go beyond annual strategies and look ahead to your long-term financial goals. An advisor can help you put together a multi-year plan to reduce your tax burden in the long run. For instance, they can save money by lowering future taxes, like when selling an investment property.
Tax planning includes making yearly changes to IRA contributions, charitable deductions, and staying updated on local tax laws. Get help from a financial advisor for tax planning all year.
They can help you get the most deductions, use tax credits, and invest in a tax-efficient way. An advisor can help you save money and stay updated on changes to your plan. They will make sure you take advantage of all opportunities to lower your bill.
Sources:
https://oechsli.com/my-account/us/library/89907/
Disclosures:
This information is an overview and should not be considered as specific guidance or recommendations for any individual or business.
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This material is provided as a courtesy and for educational purposes only. Please consult your investment professional, legal or tax advisor for specific information pertaining to your situation.
These are the views of the author, not the named Representative or Advisory Services Network, LLC, and should not be construed as investment advice. Neither the named Representative nor Advisory Services Network, LLC gives tax or legal advice. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. Please consult your Financial Advisor for further information.