Beyond April 15th: Proactive Tax Planning with Elmwood
Effective tax planning is not a one-time annual event; it's a continuous process that, when integrated into your overall financial strategy, can significantly impact your long-term wealth accumulation and well-being. As our understanding of your complete financial picture evolves, including your investments, income streams, and future goals, it allows us to provide useful tax-aware planning. This is where Elmwood steps in.
Coordination of tax documents: As you begin to prepare your taxes, Elmwood assists clients to accumulate relevant documents and information they may require such as 1099’s, K-1’s, 529 plan statements, donor advised fund statements, and details on qualified charitable donations.
Estimated tax payments: For those who need to pay quarterly estimates, Elmwood ensures cash availability for timely payments.
Maximizing Tax-Advantaged Contributions: Throughout the year, Elmwood will work with clients to maximize contributions to tax-advantaged accounts such as 401(k)s, IRAs (Traditional or Roth), Health Savings Accounts (HSAs), and 529 plans. We help you understand the contribution limits, the tax implications of each type of account, and how these contributions align with your savings goals and overall tax strategy.
Implementing Tax-Efficient Investment Strategies: We consider the tax implications of your investment portfolio year-round. This includes strategies like asset location, which involves strategically placing different types of investments in various accounts (taxable, tax-deferred, or tax-free) based on their respective growth rates and how they are taxed.
Utilizing Tax-Loss Harvesting: Market fluctuations throughout the year can present opportunities for tax-loss harvesting. By selling these investments at a loss (and immediately reinvesting the proceeds into a similar security), you can offset realized capital gains and potentially deduct up to $3,000 of ordinary income per year.
Navigating Roth Conversions: A Roth conversion involves moving pre-tax assets from a traditional IRA or 401(k) to a Roth IRA. This is a taxable event in the year of the conversion, but qualified withdrawals years later in retirement are tax-free. By considering your current and future tax brackets, we help determine the optimal timing and amount for such a conversion potentially saving you and your heirs tax dollars in the future.
Charitable Giving: As your advisor, we analyze and help coordinate the most efficient way for you to make the important grants to the charities and non-profit organizations of your choice. This may involve using strategies such as opening your own personal charitable account, using low-cost stock as a gift, or re-directing the funds from a retirement account required minimum distribution.
Year-End Tax Planning: As the year draws to a close, Elmwood will assist in coordinating a meeting with your tax preparer to review what has transpired to date and make sure nothing is missed before the year-end.
As your financial advisor, Elmwood acts as your partner in navigating the complexities of tax planning throughout the year. Though we cannot act as substitute to your own tax preparer, our goal is to fill the gap to provide tax planning where a busy accountant may fall short. Contact us to discuss your own tax situation, https://bob-6667949.app.twentyoverten.com/contact
DISCLAIMER: Past performance may not be indicative of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product made reference to directly or indirectly in this newsletter (article), will be profitable, equal any corresponding indicated historical performance level(s), or be suitable for your portfolio. Due to various factors, including changing market conditions, the content may no longer be reflective of current opinions or positions. Moreover, you should not assume that any discussion or information contained in this (article) serves as the receipt of, or as a substitute for, personalized investment advice from Elmwood Wealth Management. A copy of our current written disclosure statement discussing our advisory services and fees is available for review upon request.