Tax and Estate

What is Tax Planning?

Every year, millions of Americans stress about their business or personal taxes – and may feel confused, unprepared, or even surprised when their tax liability is calculated.

Tax planning allows you to pay the lowest taxes possible that align with your financial plan and your state and federal tax laws. Thus, you can go into each tax season feeling confident, supported, and clear about where you stand and how to keep more of your hard-earned money.

We work to mitigate our clients’ unnecessary risk. Our emphasis on tax-efficient advisory optimizes long-term financial planning by minimizing tax liability and proactively communicating with the most appropriate accounting and legal experts.

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Difference between Tax Preparation and Tax Planning

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Tax Preparation

The goal is to file your tax return accurately and on time. Typically done once a year, tax preparation focuses on the tax year that has already passed, where you’ll gather all your income and expense documents (W-2s, 1099s, receipts, etc.) and use them to file a tax return.

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Tax Planning

The goal is to minimize your tax liability so you can keep more of your money while maximizing your tax benefits. Tax planning can be an ongoing process throughout the year, and it focuses on your current and future years. Like financial planning, you’re preparing for your future to come out ahead in your financial life. As part of a client’s financial plan, tax planning can save considerable money over time and provide clients with peace of mind.

Benefits of Tax Planning

1

Reduces Taxes Owed

You may see a smaller amount of taxes owed. You can put the money saved towards your future. You’ll keep more money in your pocket by taking advantage of deductions, credits, and other tax savers.

2

Budget More Effectively

You’ll be able to anticipate the amount of taxes you owe throughout the year, allowing you to budget more effectively and avoid scrambling to come up with a large tax payment, giving you greater peace of mind.

3

Make Better Decisions

When you face tax implications or decisions ahead of time, you’ll make more informed decisions regarding your money. For example, tax planning can help you decide when to sell investments or how much to contribute to retirement accounts.

4

Help Reach Your Goals

Tax planning doesn’t just focus on the current year – it focuses on your future. You’ll be better able to hit your long-term financial goals and save for retirement.

Let Us Help You achieve Your Financial Goals

Since we are a fee-only advisor, we do not accept commissions or other types of compensation from any of our investment product companies. The only fees we earn are paid directly by our clients.

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Purpose of the Tax and Estate Advisory Services

A tax advisor helps you better prepare for tax season. They assist you with understanding tax implications, maximizing your tax savings, handling complex tax situations (whether for you or your business), avoiding IRS penalties, and steering clear of inadvertently making decisions that will negatively impact their tax situation. With a tax advisor, you can minimize your tax risks while simultaneously planning for a brighter financial future.

Tax Planning Services

We use several strategies and a deep-dive audit and analysis of your tax/financial life so you can feel fully supported and thoroughly prepared.

Structuring Investments for Tax Efficiency

We help you choose investments that can lower your tax burden. This could include selecting tax-exempt municipal bonds or using tax-efficient ETF’s (exchange traded funds) as part of an investment portfolio.

Utilizing Tax-Loss and Tax-Gain Harvesting

With “harvesting”, you’re selling investments at a loss to offset capital gains and reduce your tax liability. Then, you can reinvest the sales proceeds into a similar (but not identical) investment. You can stay compliant with tax laws by using a tax advisor as your guide.

Avoiding Medicare and Social Security Tax Traps

Strategies that minimize the taxes you pay on your Social Security benefits and Medicare surcharges. Some tax planning strategies help reduce income levels that push you into a higher tax bracket, which taxes your Social Security benefits.

Optimizing Charitable Giving Strategies

Donating appreciated assets, such as real estate and stock, can be a tax efficient way to give to charity and keep more of your money. Plus, there are special tax considerations for those aged 70 1/2 and older.

Analyzing Roth Conversion Opportunities

Here, we’ll look at the benefits of converting a Traditional IRA into a Roth IRA. Implementing Roth conversions may offer tax advantages in retirement, but there can also be tax implications for the conversion year. By working with a tax planning professional, you can make the best choice for your situation.

Managing Tax Brackets in Retirement

Social security benefits and withdrawals from retirement accounts and pensions affect your taxable income. Tax planning will give you strategies to minimize your tax burden as you prepare for (and go through) retirement.

Adapting to Changes in Tax Policy and Legislation

Tax laws change frequently, so working with a qualified tax professional is crucial. Our tax advisors stay up-to-date on the latest tax laws so you can adjust your tax planning strategies at any time.

Coordination with Tax Preparers

Working with your CPA or tax preparer in coordination with tax planning is a pivotal process. A qualified tax professional will help you understand tax laws, develop a personalized tax plan, and ensure you’re compliant with filing regulations.

Through investigative conversations and looking at your income and assets, our qualified tax advisor will help you set goals and avoid surprises through ongoing tax planning. We prioritize close relationships with our clients to ensure we are with them at every step of this recurrent tax planning process. If you’re ready to secure and grow your finances while planning for your future, contact us in the Baltimore or Syracuse area.

FAQ's

  • Tax planning helps you minimize your tax liability, keeping more of your money by strategically managing deductions, credits, and future tax implications. It provides clarity and confidence for your financial decisions.

  • Tax planning for retirement involves strategies like contributing to tax-advantaged accounts (IRAs and 401(k)s), managing withdrawals to minimize tax impact, and considering tax-efficient investment strategies to maximize retirement income.

  • Tax reduction strategies include maximizing deductions and credits, contributing to retirement accounts, using tax-deferred investments, and considering tax-loss harvesting to offset capital gains.

  • Yes, Passive Capital Management focuses on tax-efficient investment strategies and collaborates with tax professionals to optimize your tax situation and minimize your tax liability over time.

  • Tax-loss harvesting allows you to offset capital gains by selling investments at a loss, reducing your taxable income, improving after-tax returns and helping to lower your overall tax burden.

  • A tax-efficient estate plan involves strategies like creating trusts, making strategic charitable donations, and using tax-advantaged accounts to minimize estate taxes and ensure a smooth transfer of wealth. Our team can review your plan to ensure it maximizes tax-efficiency.

  • Making changes to retirement accounts depends on each individual’s unique situation, but converting an IRA to a Roth IRA can prove beneficial particularly if you expect your tax rate to move higher in the future. While you pay taxes on the conversion now, future withdrawals from a Roth IRA are tax-free, which can prove advantageous for long-term tax planning.