Tax Planning

In our last two pieces, we covered some tools of the tax-planning trade, as well as how to deploy them for tax-efficient investing.

However, tax planning isn’t just for your investments. Life happens. Often, we cannot predict its next moves, but we can weave each event into the tax-planning fabric of your financial life.

Believe it or not, another year has rounded third base and is dashing toward home plate. That said, there’s still time to make a few good plays in 2021 while positioning yourself to score more in the year ahead. Here are six financial best practices for the record books. 

Your goal should be to get the IRS to owe you money. Of course, the IRS is not likely to cut you a check for this money (although in the right circumstances, that will happen), but you’ll realize the cash when you pay less in taxes.

In our last piece, we introduced some of the tools of the tax-planning trade. These include tax-sheltered accounts for saving toward retirement, healthcare, and education, as well as tax-efficient tools for charitable giving, emergency spending, and estate planning.   

Whether you’re saving, investing, spending, bequeathing or receiving wealth, there’s scarcely a move you can make without considering how taxes might influence the outcome. No wonder people get nervous when there’s lots of talk about higher taxes, but little certainty on what may come of it, and who it might affect. 

Taxes are like vehicles in that they sometimes need a periodic check-up to make sure they are performing as expected, and if ignored, can cost you money. That is true of taxes as well, especially for 2021, as the pandemic benefits begin to wane and President Biden’s tax proposals loom.

It’s hard to imagine that a small business does not qualify for some or all of the employee retention credit (ERC). 

Whether your Social Security benefits are taxable (and, if so, the amount that is taxed) depends on a number of issues. The following facts will help you understand the taxability of your Social Security benefits. 

In Part I of our series on Tax-Wise Investing, “You and Your Investments,” we explored how to engage in year-round tax-wise investing by adopting your own best practices as well as by favoring fund managers who are likewise keeping a tax-efficient eye on their offerings.

While “tax season” may imply that there is an optimal time to think about your income taxes, the best way to minimize your annual “pay-triotic duty” is to engage in year-round tax-wise investing, with ongoing best practices in: