What is Tax Planning?
Tax planning is a strategic approach to managing one’s financial affairs with the primary goal of reducing overall tax liability. It’s not just a once-a-year activity when preparing taxes; it’s a continuous process that requires attention throughout the year. For instance, a tax plan might recommend selling underperforming investments before year-end to offset gains from more profitable ones. Effective tax planning can enhance investment returns, as taxes can significantly reduce profits. Additionally, decisions like choosing between a traditional IRA or a Roth IRA, considering estate taxes, and utilizing trusts for wealth transfer all fall under tax planning.
Why is Tax Planning Important?
Taxes are a significant expense for many individuals and businesses. Proper tax planning ensures that you take advantage of every available deduction and credit, reducing your overall tax liability. It also plays a crucial role in retirement planning, where decisions about investment types can impact post-retirement income. Furthermore, tax planning considers contributions to health savings accounts, 529 education plans, and the timing of charitable giving.
How Does Great Lakes Benefits and Wealth Management Approach Tax Planning?
Our approach is holistic and tailored to each client’s unique financial situation.
- Tax Return Preparation: Including those for rental properties and partnerships.
- Maximizing Deductions: Ensuring you claim every deduction you’re entitled to.
- Tax-Loss Harvesting: Timing security sales to offset gains and reduce tax liability.
- Capital Gains Strategy: Ensuring the best use of capital gains tax rates.
- Retirement Tax Planning: Minimizing taxes during retirement.
- Life Event Tax Implications: Evaluating the tax effects of significant life events like marriage, parenthood, and divorce.
In addition to these tax-specific services, we assist with other personal finance matters such as insurance, college savings, debt management, and small business financial plans.