Platinum Tax Advisory
SERVICES
Using a holistic approach to guide my clients from planning to success!
Planning
Starting with the tax return we can uncover any areas that could be improved to reduce taxes. We can help you understand and implement sound, effective tax planning strategies to minimize your tax liability, protect and preserve your hard-earned assets and manage your cash flow.
Reducing Taxes: You can reduce the amount of tax you pay by contributing to a 401(k) or similar retirement plan at work or through various adjustments (deductions) to income. Adjustments include contributions to a traditional IRA, student loan interest paid, alimony paid, and classroom related expenses.
Increasing
Tax Deductions: A tax professional can help you decide whether to take a standard deduction or to itemize your deductions. The three biggest itemized deductions are:
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mortgage interest,
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state taxes,
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and gifts to charity.
Other itemized deductions include expenses for health care, personal property taxes, job-related expenses, tax preparation fees, and investment-related expenses. It's a good idea to keep track of your itemized expenses throughout the year.
Taking Advantage of Tax Credits: The government gives tax credits for college expenses, retirement savings contributions, and for adopting children. Another tax credit is the Earned Income Credit (EIC). You may be eligible to claim the earned income credit if you earn less than a certain amount.
Strategy
1. Don't lose money-it's advice Warren Buffett also gives often. "While so many of us are focused on making money, the most successful investors on the planet are obsessed with not losing it," he explained. That means being very, very smart about financial risk.
2. Don't overpay taxes -if your portfolio isn't tax efficient, then you may not be keeping as much as you should be. When it comes to our investments, we have been taught to focus on returns, but it's not what you earn that matters, it's what you keep.
3. Look for investments in which rewards far outweigh risks. While there is no such thing as a risk-less return, every money master in the world will tell you, without exception, one of the most vital components of your portfolio is to find investments with asymmetric risk and reward.
4. Diversify. If you do all of your saving for retirement in traditional 401(k)s and individual retirement accounts, you could face hefty required withdrawals in retirement that bump you into a higher tax bracket. Tax diversification simply means that money is spread among various asset accounts in such a way that minimizes taxable income in retirement.
Retirement Options and Their Tax Impact. ...
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Pensions. ...
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Social Security. ...
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401K/403B plans. ...
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Traditional IRAs. ...
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Roth IRAs. ...
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Non-retirement savings
Results
In retirement, you can draw from all three types of accounts in a way that minimizes your tax bill.
For most people, generally the order of withdrawals in retirement is taxable first, and then tax-deferred and then tax-free and you want to save the Roth for last because every single dollar of earnings is tax-free. However, there is also an exception to this order of spending. If you have a very large traditional 401(k) or IRA balance and you’re going to need to pay a high tax rate on the withdrawals, it can make sense to start taking distributions before you are required to so you can space them out over more years and perhaps pay a lower tax rate on at least some of the distributions. If they are in a low tax bracket – 15 percent or less – we look to actively convert traditional IRAs to a Roth. “In retirement, there are a lot of advantages to having amounts in taxable, Roth and traditional accounts. It brings the required minimum distribution down when they get to 70 1/2.”
Maintaining a balance in accounts with different tax treatments heading into retirement gives you options to minimize your tax bill each year.