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Income Tax Planning


Key Questions:

  • How much income tax are you paying on your investments?
  • What type of tax-advantaged investment programs do you currently have?
  • How many tax-advantaged retirement plans (IRA, 401(k), etc.) do you participate in?
  • What strategies are you employing to take advantage of the new income tax schedule for dividend income and capital gains?
  • When do you anticipate utilizing retirement plan assets for income?
  • What is your current tax bracket?
  • Which fixed income investments do you currently favor: taxable or tax-free?

Income tax considerations impact almost every aspect of a financial plan. The primary tax planning ideas still hold in that deferring taxable income and accelerating deductions are still good strategies. Also, it is usually advisable to shift income to lower tax bracket members in the same family unit. However, children under 14 years old will pay taxes based on their parents' marginal tax rate over a certain threshold. Another obstacle in family income shifting is the marginal tax bracket structure of trusts.

The following are some major tax income planning topics to consider in the context of comprehensive financial planning:

  • Employee Stock Options
  • Concentrated Equity Positions
  • Employer Stock Inside an Employer Qualified Plan
  • Charitable Giving
  • Sale of Residence
  • Estimated Tax Penalty Planning
  • Wash Sale Rules
  • Tax Equivalent Yield
  • Roth IRA Conversions
  • Tax Planning with Limited Partnership and REITs
  • Tax Planning Between Trust/Estate and Beneficiary
  • Financial Planning from the Tax Return