What is the difference between Tax Planning and Tax Preparation?
While many taxpayers believe that tax preparers are responsible for minimizing their annual tax bill, the primary purpose of tax preparation services is to accurately complete and file necessary forms during tax season to comply with state and federal laws. While a good Tax Preparer can sometimes find ways to help you save on taxes, such as by identifying applicable tax credits and deductions, the process is often RE-ACTIVE rather than PRO-ACTIVE. Tax Planning is a year-round process that takes into account a client's past tax filings, current financial situation, and future financial goals. Successful Tax Planning requires ongoing communication and a PRO-ACTIVE; big-picture approach, as both the applicable tax laws and the client's situation may evolve over time. Effective Tax Planning not only considers immediate benefits but also plans for the long-term potential tax reduction over a client's lifetime.
Here are some of the questions Tax Planning may help you answer in your retirement planning:
- Am I paying too much in lifetime taxes?
- How can I reduce my tax liability over my lifetime?
- Am I invested appropriately?
- When I start withdrawals in retirement, where do I withdrawal from?
- How do my assets pass onto my loved ones in a tax efficient manner?
- What are some of the tax traps I may not even be aware of?
Tax Efficient Investing
Am I paying too much in lifetime taxes?
Am I invested appropriately?
ETF's vs Mutual Funds
Qualified dividends vs ordinary dividends
Taxable vs Tax Deferred vs Tax Free accounts
Tax Efficient Distributions
What's the most tax efficient way to withdraw funds in retirement?
Income Planning by Tax Bucket
Expense Planning
Guaranteed sources vs. Non-guaranteed sources
Micro Tax Strategies
How could I potentially reduce my current tax liability?
Capital Gain Harvesting
Capital Loss Harvesting
Strategies when selling highly appreciated assets
Asset Allocation
How can I reduce my lifetime tax liability?
Where should my investments be located?
Tax Bucket Planning
Tax Diversification
Capital gain and capital loss harvesting
Tax Gotcha's
What are the Tax Traps I could run into and may not even know about?
Social Security tax trap
Medicare IRMAA surcharges
Widows Penalty
N.I.I.T. (Net Investment Income Tax)
Estate Tax Efficiency
How do my assets pass onto my loved ones in a tax-efficient way?
Charitable Giving
Bucket Strategies
Life Insurance Trusts
QCD's and DAF's
Eleventh-Hour Planning
Are You Paying Too Much in Taxes in Retirement?
- The different types of retirement accounts
- Why tax laws are ever-changing
- Options for tax deductions in retirement
Schedule Your Proactive Tax Planning Consultation
Schedule a 15-minute introductory phone call with one of our Fiduciary Advisors to discuss your unique situation, and to answer any questions you may have regarding tax planning for your retirement.
