With the spring season upon us and the often dreaded “Tax Season” behind us, now is a great time for some financial spring cleaning - making sure your plans are on track, investments are allocated appropriately and doing what they are supposed to, and ensuring your financial goals are up-to-date.
Now is the time to consider an Annual Tax Return Analysis and is a great time to check-in on your Investments to make sure your financial house does not run astray.
Review my tax return, Why?
As the adage goes - only taxes and death are certain in life. We like to take this one step further by helping clients realize that only one of the two are relatively in our control - Taxes! Taxes can often be a family’s largest expense, which is why it is critical to work with a Tax-Smart Financial Planning Firm to review your (hopefully recently) filed prior-year tax return. Doing so may help uncover current opportunities that you are missing out on and to identify future planning considerations that can help alleviate and reduce your overall lifetime tax burden. While your prior year tax preparation is fresh, analyzing your prior year tax return with a tax-smart firm can help you answer the following questions:
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Am I paying the “just right” amount of taxes - no more and no less than I should be? Did I overpay in taxes this past year? Does my current plan have me overpaying in taxes in the coming decades?
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Am I currently implementing the proactive and legal tax reduction strategies available to me? If not, why didn’t my current financial planner or tax accountant help me pursue these?
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Do I currently have financial and tax planning blind spots? If so, what is the best roadmap to address these?
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Am I optimally contributing my Pre-Retirement contributions to the current accounts based on my tax situation, including Pre-tax, Roth, Taxable, and other? If not, what changes should be made?
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What investment accounts should I be withdrawing from and in what amounts to ensure my money goes towards paying for my lifestyle instead of taxes?
We strongly believe that every financial decision, at its core, is also a tax decision and that taxes should be treated as more than a once-a-year event. If not properly planned for, taxes can unnecessarily erode the net result of all your hard work and what you ultimately take home.
Taking a proactive approach to your tax situation not over just one year, but over your lifetime, and by taking full advantage of opportunities to legally reduce your lifetime tax burden, you are able to maximize your after-tax wealth. This ultimately improves the chances of meeting your cherished financial goals and is what you are able to share and enjoy with yourself and your family.
How do I know my investment plan is optimized for me and my financial plan?
Without a customized plan aimed at reducing your annual tax bill, the average investor sacrifices unnecessary returns. An investment plan that is not only aligned with your risk preferences, but which also accounts for your personal financial planning requirements and tax situation will help you protect and build what you have worked so hard for.
An investing approach should focus on strategies sensitive to your appetite for risk, account for what investment returns are required to help fulfill your goals, and eventually provide a tax-efficient distribution plan to provide for your lifestyle in retirement. When reviewing your current portfolio and investment plan, there are a few questions you should consider for yourself:
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Do I first have a detailed financial plan to help serve as my investment planning cornerstone? Do I understand my objectives, personal risk tolerance, and time horizon for what I am investing for?
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Am I properly diversified and have an asset allocation which will help maximize my probability of success and decrease my overall investment and plan risk, all while being cognizant of tax implications?
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Am I controlling the controllable? Are the underlying fees of my investments being considered? Are my investment accounts being managed to minimize tax implications and maximize after-tax returns? Is the risk of my portfolio being managed to help reduce volatility and provide for long-term growth?
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Is my current financial planner proactively Tax-Loss Harvesting in my taxable investment account(s) to help offset current and future capital gains? If not, should I be?
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Am I receiving unanticipated tax bills from the government due to mutual funds distributing unexpected capital gains? Are there tax-smart strategies which can help avoid this in the future?
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Is my current financial planner proactively contacting me when markets are volatile to review Roth Conversion opportunities? If not, is this something I should consider?
By reviewing these questions, you can ensure your money is working for you and helping you to reach your goals over the long-term.
To help you get started, please visit go.riskalyze.com/start-rq to help develop your own Risk Number. Your Risk Number is unique to you and can help determine if your current investments are in alignment with your own personal risk preferences.
RGWwealth.com | 9800 Shelard Pkwy, Suite 330, Plymouth | 763-417-0809
Securities offered through Avantax Investment Servicessm, Member FINRA, SIPC, Investment advisory services offered through Avantax Advisory Servicessm. Insurance services offered through an Avantax affiliated insurance agency.