June 2023 Newsletter: Tax Planning
This month's newsletter is all about taxes!
You're already ahead of the pack if you’ve kept reading beyond the first line. So many individuals try to limit the time and brain space devoted to taxes to the scramble of weeks leading up to Tax Day. The saying about “death and taxes” notwithstanding, there actually is something to be done when it comes to managing the impact and timing of your tax liability over the long run. Still, the time to do something about it is not the first two weeks of April when the bill comes due.
Increasingly, financial advisors are differentiating themselves by offering services that extend beyond portfolio management. Long-term tax planning is one of the largest opportunities to impact a client’s “after-tax” bottom line. With the rise of low-cost index funds, zero-commission trading, and robo-advisors who can recommend a perfectly adequate and diversified portfolio and manage the rebalancing, it is no wonder that younger generations have shied away from paying hefty AUM fees to old-school investment advisors who just manage money (and rightfully so!)
Yet, while your tax professional or CPA may keep you out of trouble with the IRS (very important), their visibility is often limited to what occurred in the previous year and they’re often too backed up around the lead-up to Tax Day to be able to take a step back and look toward what’s ahead. A good financial advisor will have a window into your entire financial picture (your career path, your family, your goals and values, and all of your assets) and is ideally situated to help you execute a long-term tax plan to maximize your after-tax wealth. The value of certain strategies can easily amount to hundreds of thousands (or millions of dollars) over a lifetime, depending on the individual situation.
Check out a couple of tax strategies discussed in more depth in recent articles:
For eager readers, check out an older article on the power of Asset Location strategies.
Like so many personal finance matters, you can get 80% of the value for a 20% investment in time and knowledge (but beware of overconfidence!). Even an imperfect plan can make a huge difference, and no plan is perfect.
Need help to understand your 2022 tax return?
The first five people to respond by email will receive a free summary explanation and analysis of their tax returns.
Act now, and make a plan!
