Tax Planning: significant benefits you can enjoy this year

Dear Client:

Does any of the below describe your recent experience?

  • Had substantial federal and/or state tax due on your prior year tax return(s);
  • Did not have enough tax withholding from your pay check due to personal financial obligations;
  • Had contractor (1099-MISC) income but very few deductions;
  • Had to withdraw funds from traditional or Roth IRA, or from any other retirement plan to cover personal financial obligations;
  • Inherited a retirement plan or a real property that was subsequently sold;
  • Married or divorced;
  • Had children;
  • Started a new business or became a partner in existing business;
  • Sold your business or share in the business;
  • Retired;
  • Moved overseas or came to the US from a foreign country;
  • Bought a real property;
  • Rented out a real property to a tenant.

If it does, or you had other events that you believe may have made your tax filing more complex or daunting, then you will undoubtedly benefit from our tax planning service.

Since US tax code is extremely complex, it is close to impossible to act preemptively to soften the impact of taxation on your own.  The key is a thorough analysis of actual and projected data for current and next few years (if necessary) designed to show how your taxation is impacted and what could be done to optimize it.

In the past, tax planning was an exclusive domain of wealthy taxpayers. Not anymore.  We firmly believe that vast majority of middle-class taxpayers and business owners can benefit from a proactive tax planning in a big way.  It generally means not having to write a big check to IRS, or even getting a refund where none was available before, or increasing an amount of refund.

So what is involved in a typical tax planning?  The short answer is analyzing your current and future years’ income and expenses to see how they affect your taxation, creating models that visualize the impact of the taxation, and proposing actionable steps to defer, reallocate, reduce or eliminate different types of taxes.

Why are some people reluctant to order the annual tax planning?  In our experience, those who think the fees are exorbitant or don’t believe in real benefits are usually the ones who forgo this important activity.  Next, we will show why both of these arguments are far off the mark.

For most taxpayers, especially if you had or plan a life event such as described above, the benefits are very real.  Let’s consider a case in point.  Ms. XYZ, our valued client, sold a large chunk of her securities earlier in 2016 generating a hefty $750,000 in capital gains. She has not consulted with us prior to the sale. When she signed up for the tax planning engagement in September 2016, we told her about potential implications such as moving to a higher tax bracket, becoming a subject to Alternative Minimum Tax (AMT), having an additional 3.8% Net Investment Income Tax triggered, and phase-out of some deductions and credits.  Ms. XYZ became worried that she’d get hit with a big tax bill.  We built a preview of her 2017 tax return and then provided a list of steps to be taken so her overall tax is reduced.  Then, with the help of her investment adviser and following our recommendations, Ms. XYZ was able to reduce her exposure to a more comfortable level using legitimate strategies that are not at all difficult to implement.

Next, we will briefly consider the fees.  You will find CPA firms that charge based on hourly rate, or have some type of contingency fee (a % of savings), or just a flat fee.  We utilize the flat fee approach.  Our fee varies depending on complexity of your particular situation and number of years to be included in the analysis.  However, in all cases, we guarantee that our fee will be less than the savings you stand to gain if you follow our recommendations.  In many cases, our fee will be a mere fraction of the savings.

With reasonable fees and real, tangible benefits that bring about serious tax savings (read – extra cash in your bank account), there is really nothing to lose and everything to gain.  We provide the service that is designed to keep more of what you earn rather than spend it.

If you have read up to this point, you probably wonder what the tax planning can do for your unique tax situation.  For this very reason, we offer a free, no-obligation analysis of your most recent tax return to determine whether or not you are a good candidate for the tax planning.  If you are our existing client, we will have your most recent filing and all you have to do is to ask us to do a pre-planning assessment (we will provide a quote and send an engagement letter to sign).  If you have never used our services before, it will be necessary to meet in person to clarify your objectives and issue the quote.  Our quotes are free, too, as are introductory meetings.

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