Everyone knows what taxes are, but most people don't understand the tax system beyond the basic rate structure. The Tax component to the PRETIRE system incorporates tax reduction and tax deferral strategies into the other components of the plan, as well as preparing (or helping to prepare) your annual tax filings.
The U.S. tax code is incredibly complex and becomes more complicated with every update. While lobbyists continue to push Congress for a simplified "flat tax" or at least a revised tax code, it is unlikely that a major improvement will be implemented any time soon. Since most people don't understand the tax code, planning and executing a financial plan efficiently is a difficult task. Accurately preparing annual tax filings can be even more difficult, especially if you're using a tax preparer who doesn't have insight into youf finances for more than a few hours each year.
While we are not CPAs and there are situations where you'll want to rely on a CPA for tax advice, we are able to help you plan and execute your plan in a tax-efficient manner. Among the myriad of tax savings or tax deferral strategies we might employ are:
Efficient management of your investment portfolio including tax-free, tax-deferred, and taxable accounts.
Tax loss harvesting opportunities.
Tax-exempt investments where appropriate (like municipal bonds).
Efficient use of employee stock options, restricted stock, and share purchase plans.
Contributions to IRA / Roth IRA / 401k / Roth 401k / SEP / SIMPLE.
Maximized use of standard deduction and personal exemptions.
Maximized use of planned marginal tax rate differences from year to year.
Timing of discretionary tax deduction items.
Income for minor children (considering the "kiddie tax").
Shifting income to relatives for estate planning purposes.
Gifting strategies.
Optimizing the timing, amount, and type of charitable giving.
Use of life insurance in estate planning.
Ensuring that casualty losses are properly documented and accounted for.
Ensuring that rental properties are properly depreciated following cost recovery doctrines.
Maximizing the use of self-employment deductions.
Maximizing the use of medical deduction in years where the taxpayer is approaching the 7.5% floor.
Maximizing the deductibility of interest payments through the use of home equity loans.
Proper tracking of carryover investment losses, disallowed passive activity losses, and charitable deductions.
Avoiding or controlling the timing of preferences and adjustments under the alternative minimum tax.
Efficient withholding of taxes.
Use of available tax credits and planning to qualify for them.
Optimal selection of property when making gifts and bequests (income producing, appreciated, cash, stocks, etc).
Use of installment sales for disposition of property.
We are also qualified to prepare 1040 and state tax returns and will do so for all of our clients. If your tax return is more complicated than a 1040 return permits, we will work with your tax preparer as much as required to minimize your need to be involved in the process. Either way, our tax program aims to make your finances tax efficient without utilizing a massive amount of your time to do so.
Almost everyone needs some sort of assistance with tax planning and preparation. While you can easily get by without it, it's likely that you'll be giving our government more than its fair share of your income and/or estate. Paying unnecessary tax puts an unnecessary strain on your financial plan by imposing additional constraints. Tax planning and preparation is an area that can usually generate an almost immediate financial return on the amount invested. Since PWA is preparing your 1040 return for a minimal filing fee, you'll get even more of a return by letting us help you.
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