Tax Planning is a term largely misunderstood in the financial services industry. It does not include tax return preparation or estimated tax payments. A holistic approach to your overall financial situation, from the current year to multi-year goals, to your estate planning, can potentially deliver larger returns in tax savings than some of your investments can yield.
Tax planning strategies can be utilized in a variety of situations, and most investors and even financial professionals are unaware of these opportunities. Some strategies involve real estate and business transactions that should always be examined for tax planning, but some can be used for ordinary investments and even ordinary wages. Many different types of strategies exist depending on your circumstances. They could get complicated in explanation, let alone execution. On this page, we will give you an overview of the process, some of the strategies at the high level, and our value proposition.
Tax Planning: What Is It?
Tax Planning is NOT tax preparation. The goal is to reduce your tax bill, NOT to pay $0. Proactive tax reduction strategies typically fall into one of four categories:
- Large Transactions such as Real Estate
- Investments
- Business Ownership
- Long-Term Planning, including Charity Giving Planning
What Does Tax Planning Process Involve?
- Review prior year taxes, identify missed opportunities or mistakes
- Project income for current and next year
- Identify and apply multiple strategies prior to year end
- Review tax forms to ensure proper filing of strategies
Tax Planning: When?
You may be wondering who tax planning is for and in what situations it makes sense. Every situation is different, but here are a few situations when you should consider tax planning:
- Capital Gains of $100K+
- A business owner with ordinary income of $500K+
- Estate Tax over exclusion limit
- Timing: before large transactions, big decisions, and end of the year
Certain strategies make sense outside of the above guidelines.
Tax Planning: Why?
The US Tax Code is complex. In fact, the US Tax Code is said to be the single largest law ever written. Your CPA may only be able to apply their knowledge after the fact. Tax Planners are highly qualified, educated and licensed professionals. One of their responsibilities is to keep track of the ever-changing laws, at every level, understanding expiring provisions and anticipating future changes.
Recent major law changes affect personal, business and estate taxes include:
- Tax Cuts and Jobs Act (2017)
- SECURE Act 1.0 (2019)
- CARES Act (2020)
- Inflation Reduction Act (2022)
- SECURE Act 2.0 (2022)
Laws come with specific rules, limits, time-frames, caveats and exceptions. You also need to understand expiring provisions and anticipate future changes. Bottom line: you need a team of professionals to make sense of it all and devise the best strategy for your taxes in the context of your overall financial planning.
What Does Our Tax Planning solution Include?
Tax Planning is the extension of our comprehensive Financial Planning and follows the following process:
- Have a consultation with Eureka and tax planning team
- Get presented with tax-saving options – analysis of savings, costs, audit risk and other considerations
- If you choose one or several, the cost of implementation will be substantially lower than the savings
- Implementation costs go to the vendor
- There’s no fee to Eureka or tax planner
- Your only commitment is for the Super Plan
