Tax Planning
Tax avoidance is not a criminal offense. Tax payers have the right to reduce, avoid, or mitigate their taxes by legitimate means. One who avoids tax does not conceal or misrepresent but shapes and pre-plans events to reduce or eliminate tax liability within the parameters of the law.
My process aims to help clients achieve higher after-tax returns, with the goal of allowing you to keep more of your earnings.
Individual Indexing
Not only does it provide more control than an ETF, but it may also be able to offer greater opportunities for tax loss harvesting.
Asset Location
Putting investments like high-yield bonds and active mutual funds with high turnover in tax-advantages accounts may be able to help mitigate taxes on your portfolio.
Accelerating Gains
There are times when you may fall into the zero capital gains bracket and be able to reset your cost basis.
Qualified Charitable Donations
Once you turn age 70½ you can make tax free qualified charitable donations out of your traditional IRA. Limits apply.
Charitable Giving
Using a donor-advised fund to front-load your charitable giving in high-income years or if you receive a windfall.
Roth Conversions
When should Roth conversions be made and how much should be converted?
The information in this material is not intended as tax or legal advice. Please consult legal or tax professionals for specific information regarding your individual situation.
Frequently Asked Questions About Tax Planning
Should I consider a Roth Conversion?
A Roth Conversion involves moving money from a tax-deferred account (like a Traditional IRA) into a tax-free Roth account. While you pay taxes on the amount you move today, that money—and all its future growth—can be withdrawn tax-free in retirement.
Because tax laws and your personal income change every year, I review Roth conversion opportunities annually for all of my clients. I look for “low-tax years” where a conversion might be particularly advantageous, helping you lock in lower rates now to avoid higher taxes later.
When is the best time to perform "Tax-Loss Harvesting"?
Many firms only look at taxes in December, but I believe the best time for Tax-Loss Harvesting (TLH) is year-round. Market volatility doesn’t follow a calendar; price dips can happen at any time. By monitoring your portfolio constantly, I can capture “losses” on paper to offset your “gains” whenever the opportunity arises, potentially lowering your tax bill without changing your long-term investment strategy.
Does it matter which investments I hold in specific accounts?
Absolutely. This is a strategy known as Asset Location, and it’s one of the most overlooked strategies aimed to increase your “take-home” returns.
Different investments are taxed at different rates. I aim to place “tax-heavy” investments (such as those that pay frequent interest or short-term gains) in tax-advantaged accounts like IRAs. Meanwhile, I place “tax-friendly” investments in your standard advisory accounts. By coordinating your holdings this way, I aim to increase your total after-tax return without taking on additional market risk.