Tax Planning in March & April

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Planning opportunities are present at all times, but March and April’s natural focus on taxes gives you a chance to identify opportunities and potential issues with your tax returns.

Reviewing tax returns is daunting and difficult given the many state and federal complexities and often changing rules, not to mention the fact most individuals lack fluency with taxes in general. Tracking your exposure to various taxes (e.g. ordinary income tax, capital gains tax, the alternative minimum tax, the net investment income tax, etc.), and your rights to various credits and deductions, requires time and effort.

To assist you in reviewing your filings with your CPA, we have a checklist for retired taxpayers and one for taxpayers that are still working. Each checklist outlines nearly two dozen considerations to help guide you through your returns and circumstances.

While the checklists can help you spot great ways to identify all the different opportunities to consider, we always encourage coordination amongst all your professional advisors to be sure all important items are taken into consideration. For example, you may want your CPA to know that your wealth management advisor has been able to harvest capital losses in your portfolio to offset against capital gains. This could be helpful in smoothing out your tax bill over time. Your estate planning attorney may want to coordinate with your CPA to be sure that any income associated with a trust is properly reported. And of course, if that trust owns an investment account, you will want your investment advisor, CPA, and estate attorney to have coordinated all planning matters to avoid any negative tax events.

Like most complex systems, coordination is key, and simple but elegant solutions usually prove best.

Happy tax planning.