Written by Joe Ambrose, Managing Director – First Bank Wealth Management
Taxes are always a juggling act. You’re doing well, but how do you avoid fines and save your skin? Here are some tax tips to keep in mind, regardless of how the tax winds are changing.
Begin planning early.
Waiting until the last minute to plan for anything reduces your available options, especially when it comes to taxes. Yes, there could be minor changes in the tax laws, but developing a strategy early in the process gives you maximum flexibility to minimize your taxes.
Educate yourself on tax law changes.
You aren’t going to become a tax genius, but having an understanding of the issues will lead to more meaningful conversations with your advisors.
Use a tax advisor who has the breadth of knowledge to address the complexities of your financial situation. This is very important! Your tax advisor needs to consider every aspect of your finances in order to render the best tax advice. If all you have is W-2 income, a basic tax software program or preparer can handle your taxes. If you have outside investments, are a business owner, involved in partnerships or LLCs, own investment real estate, etc., you need a tax expert familiar with how those sources of income impact your taxes. Using tax software on your home computer may not be sufficient.
Involve all of your advisors in your planning.
Your attorney, investment advisor, and business consultants should all have a seat at the table when it comes to tax planning. This ties back to starting the tax planning process early. Your investment advisor needs time to raise funds for liquidity and/or generate tax-loss harvesting. Market conditions may not be ideal at any given point to execute these strategies. Adjusting ownership percentages for tax purposes takes time for your attorney to accomplish. In addition, your business consultant may give you advice that is contrary to the best tax advice. You need time to sort out the suggestions from your advisors, and waiting until the last minute can yield less than optimal results.
Try to maintain a long-term perspective.
Annual tax law changes are a given. Generally speaking, upsetting your future financial goals to accommodate a short-term tax issue results in a cycle of reactivity and will not be a proactive approach in the long run. There will always be fine-tuning needed along the way, but maintaining a long-term perspective gives you the best chance for success.
Incorporate tax-efficient investments in your portfolio.
Make sure your investment advisor takes into account your tax status when building your portfolio. Our Wealth Management advisors at First Bank take a holistic approach when it comes to your investment objectives. Their goal is to achieve the most tax-efficient returns while taking into account your risk tolerance. Connect with the First Bank Wealth Management team to learn how we can help you achieve your financial goals. As with everything else in life, you get what you pay for. Use the best advisors you can afford.
Taxes are always a juggling act. You’re doing well, but how do you avoid fines and save your skin? Here are some tax tips to keep in mind, regardless of how the tax winds are changing.
Begin planning early.
Waiting until the last minute to plan for anything reduces your available options, especially when it comes to taxes. Yes, there could be minor changes in the tax laws, but developing a strategy early in the process gives you maximum flexibility to minimize your taxes.
Educate yourself on tax law changes.
You aren’t going to become a tax genius, but having an understanding of the issues will lead to more meaningful conversations with your advisors.
Use a tax advisor who has the breadth of knowledge to address the complexities of your financial situation. This is very important! Your tax advisor needs to consider every aspect of your finances in order to render the best tax advice. If all you have is W-2 income, a basic tax software program or preparer can handle your taxes. If you have outside investments, are a business owner, involved in partnerships or LLCs, own investment real estate, etc., you need a tax expert familiar with how those sources of income impact your taxes. Using tax software on your home computer may not be sufficient.
Involve all of your advisors in your planning.
Your attorney, investment advisor, and business consultants should all have a seat at the table when it comes to tax planning. This ties back to starting the tax planning process early. Your investment advisor needs time to raise funds for liquidity and/or generate tax-loss harvesting. Market conditions may not be ideal at any given point to execute these strategies. Adjusting ownership percentages for tax purposes takes time for your attorney to accomplish. In addition, your business consultant may give you advice that is contrary to the best tax advice. You need time to sort out the suggestions from your advisors, and waiting until the last minute can yield less than optimal results.
Try to maintain a long-term perspective.
Annual tax law changes are a given. Generally speaking, upsetting your future financial goals to accommodate a short-term tax issue results in a cycle of reactivity and will not be a proactive approach in the long run. There will always be fine-tuning needed along the way, but maintaining a long-term perspective gives you the best chance for success.
Incorporate tax-efficient investments in your portfolio.
Make sure your investment advisor takes into account your tax status when building your portfolio. Our Wealth Management advisors at First Bank take a holistic approach when it comes to your investment objectives. Their goal is to achieve the most tax-efficient returns while taking into account your risk tolerance. Connect with the First Bank Wealth Management team to learn how we can help you achieve your financial goals. As with everything else in life, you get what you pay for. Use the best advisors you can afford.
Joseph “Joe” T. Ambrose is the Vice Chairman and Managing Director of First Bank Wealth Management which provides investment management, financial planning, trust, and employment benefit services to individuals and organizations across First Bank’s markets. Joe has been with First Bank for over 32 years, primarily focused on the acquisition and retention of family business clients in all revenue areas of the bank, including Wealth Management, Retail, Commercial Banking, and Treasury Management. Possessing over 47 years of combined banking experience, Joe serves as a member of the First Bank Executive Management Committee. You may reach Joe Ambrose by phone at (314) 995-8722 or via email [email protected].
Investment and insurance products are offered through OSAIC INSTITUTIONS, INC., Member FINRA/SIPC. Osaic Institutions and First Bank are not affiliated. Osaic Institutions does insurance business in California as Osaic Institutions Insurance Agency, CA Agency License #OH30186. Products and investment advisory services made available through Osaic Institutions are not insured by the FDIC or any other agency of the United States and are not deposits or obligations of nor guaranteed or insured by any bank or bank affiliate. These products are subject to investment risk, including the possible loss of value. First Bank Wealth Management is a trade name of First Bank, and certain products and services are provided through First Bank, and its affiliates and subsidiaries. Neither Osaic Institutions or First Bank, nor any of their affiliates or financial advisors, provide legal, tax, or accounting advice. You should consult your legal and/or tax advisors before making any financial decisions. Use FINRA’s BrokerCheck to learn about the professional background, certifications, licenses, and any regulatory violations or complaints for any financial advisor.
NON-DEPOSIT PRODUCTS: ARE NOT INSURED BY THE FDIC; ARE NOT DEPOSITS; AND MAY LOSE VALUE.