Tax planning with a CPA/CFP®
We provide ongoing tax preparation and planning services tailored to future life events and changes in tax laws. Keeping up with the tax impacts of regulatory updates and life changes can lead to significant tax savings.
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Tax Efficient Investing
Amidst the ever-evolving nature of tax regulations, tax planning has emerged as an indispensable aspect of financial management. Tax-efficient investing entails optimizing investment returns by minimizing or deferring tax obligations associated with gains and earned income. By meticulously selecting account types, assets, and timing strat
Amidst the ever-evolving nature of tax regulations, tax planning has emerged as an indispensable aspect of financial management. Tax-efficient investing entails optimizing investment returns by minimizing or deferring tax obligations associated with gains and earned income. By meticulously selecting account types, assets, and timing strategies, investors can accelerate their wealth accumulation and preserve a larger portion of their hard-earned capital. Annette Di Bello, a Certified Public Accountant (CPA), Personal Financial Specialist (PFS), and CERTIFIED FINANCIAL PLANNER® (CFP®) possesses over two and a half decades of experience in tax preparation and planning. Her tax advice is grounded in the analysis of thousands of tax returns she has diligently prepared. Her comprehensive understanding of tax principles from both the microeconomic and macroeconomic perspectives provides her with a distinct advantage over other financial planners who may primarily rely on theoretical tax knowledge. As a CPA, Ms. Di Bello also dedicates over 50 hours annually to tax law continuing education, ensuring her knowledge of the most frequent tax law modifications.
Tax Drag
Tax drag refers to the detrimental impact of taxes on an investment’s overall returns. It diminishes the available funds for reinvestment and impedes the accumulation of wealth over time. Tax drag often exerts a more substantial influence on portfolio performance compared to investment fees. It manifests in taxable brokerage accounts due
Tax drag refers to the detrimental impact of taxes on an investment’s overall returns. It diminishes the available funds for reinvestment and impedes the accumulation of wealth over time. Tax drag often exerts a more substantial influence on portfolio performance compared to investment fees. It manifests in taxable brokerage accounts due to three primary types of taxable events:
- Interest Income: Taxed as ordinary income, typically annually.
- Dividend Income: Taxed upon distribution, usually annually or quarterly.
- Capital Gains Distributions: When a mutual fund sells assets for a profit, it transfers the resulting capital gains and associated tax liability to its investors.
- Personal Capital Gains: When an investor sells an investment for a profit, they are liable to pay taxes on the gain. Gains are subject to a lower “long-term” rate if the asset was held for more than a year; otherwise, they are taxed at a higher “short-term” rate.
Asset Location
Tax diversification
Tax diversification
The thoughtful allocation of investments into taxable, tax-deferred, or tax-exempt accounts to achieve the best possible tax advantages.
Tax diversification
Tax diversification
Tax diversification
Using a mix of different account types gives you better control over your tax bill, especially in retirement. It lets you pull from various accounts depending on your income and tax bracket each year.
Tax Efficient strategies
Asset Location Accounts
Strategic Timing of Sales
Strategic Timing of Sales
In tax-advantaged accounts like IRAs, it’s wise to include tax-inefficient assets like high-turnover stocks, corporate bonds and REITs. For taxable accounts, prioritize tax-efficient assets such as low-turnover ETFs, municipal bonds, and individual stocks meant for long-term holding. Avoid holding tax-inefficient assets in taxable account
In tax-advantaged accounts like IRAs, it’s wise to include tax-inefficient assets like high-turnover stocks, corporate bonds and REITs. For taxable accounts, prioritize tax-efficient assets such as low-turnover ETFs, municipal bonds, and individual stocks meant for long-term holding. Avoid holding tax-inefficient assets in taxable accounts such as mutual funds that disburse involuntary taxable capital gains that can add unnecessary taxes.
Strategic Timing of Sales
Strategic Timing of Sales
Strategic Timing of Sales
Investments held for more than a year in taxable accounts are subject to long-term capital gains taxation, which offers a lower tax rate. Conversely, investments held for less than a year result in short-term gains, which are taxed at ordinary income tax rates, which are generally higher. To avoid substantial accumulated unrealized capita
Investments held for more than a year in taxable accounts are subject to long-term capital gains taxation, which offers a lower tax rate. Conversely, investments held for less than a year result in short-term gains, which are taxed at ordinary income tax rates, which are generally higher. To avoid substantial accumulated unrealized capital gains that could result in an impending large tax liability, long-term unrealized capital gains should be appropriately rebalanced.
Tax-Loss Harvesting
Strategic Timing of Sales
Tax-Aware Withdrawals
This strategy entails selling investments at a loss to offset capital gains from other investments, thereby reducing your overall tax liability. This strategy is most effective when employed with a highly diversified portfolio comprising numerous individual stocks. Conversely, it is less effective when holding only a limited number of mut
This strategy entails selling investments at a loss to offset capital gains from other investments, thereby reducing your overall tax liability. This strategy is most effective when employed with a highly diversified portfolio comprising numerous individual stocks. Conversely, it is less effective when holding only a limited number of mutual funds. Tax loss harvesting can also be utilized in advance of a sale of high-capital gains real estate, thereby strategically minimizing taxation on sales of investment properties. Furthermore, you are entitled to utilize up to $3,000 in capital losses annually to offset ordinary income.
Tax-Aware Withdrawals
Strategic Timing of Sales
Tax-Aware Withdrawals
When managing your accounts during retirement, it is advisable to commence withdrawals from taxable accounts, followed by tax-deferred accounts, and finally, utilize tax-exempt accounts or a combination of taxable and tax-deferred accounts. This strategy can contribute to a reduction in tax obligations over the retirement period. These wi
When managing your accounts during retirement, it is advisable to commence withdrawals from taxable accounts, followed by tax-deferred accounts, and finally, utilize tax-exempt accounts or a combination of taxable and tax-deferred accounts. This strategy can contribute to a reduction in tax obligations over the retirement period. These withdrawals can be adjusted annually to optimize tax bracket selection and may be considered in conjunction with Roth conversions.
Roth Conversions
Defined Benefit & profit sharing Accounts
Maximizing 401(k) & IRA contributions
A Roth conversion involves transferring funds from a pre-tax retirement account, such as IRAs or 401(k)s, into a Roth IRA. While you’ll be required to pay taxes on the converted amount in the year of the conversion, the money can subsequently grow and be withdrawn tax-free in retirement. This approach offers greater control over your tax
A Roth conversion involves transferring funds from a pre-tax retirement account, such as IRAs or 401(k)s, into a Roth IRA. While you’ll be required to pay taxes on the converted amount in the year of the conversion, the money can subsequently grow and be withdrawn tax-free in retirement. This approach offers greater control over your tax situation in retirement, particularly in minimizing or avoiding Required Minimum Distributions (RMDs). It’s advisable to consider Roth conversions during lower tax years and align them with a lower tax bracket.
Maximizing 401(k) & IRA contributions
Defined Benefit & profit sharing Accounts
Maximizing 401(k) & IRA contributions
Contributing to an employer’s 401(k) retirement plan annually can help defer taxable income and capitalize on tax-deferred investment growth. Additionally, contributing to an IRA, even if it’s not deductible, can lower your future required minimum distributions (RMDs), thereby reducing your future taxes. Higher earners can convert their n
Contributing to an employer’s 401(k) retirement plan annually can help defer taxable income and capitalize on tax-deferred investment growth. Additionally, contributing to an IRA, even if it’s not deductible, can lower your future required minimum distributions (RMDs), thereby reducing your future taxes. Higher earners can convert their non-deductible IRAs to a Roth IRA through a backdoor Roth conversion, allowing them to make Roth contributions that would otherwise be prohibited due to income levels. This strategy is particularly effective if you have your retirement accounts in an employer plan As opposed to holding in an IRA.
Defined Benefit & profit sharing Accounts
Defined Benefit & profit sharing Accounts
Defined Benefit & profit sharing Accounts
Professional business owners can derive significant benefits from implementing tax-deferred employer benefits, which enable substantial tax deductions and tax-deferred investment growth. This strategy works best for the highly compensated professional with high profits and a low number of employees, such as doctors, lawyers, accountants and architects.
Charitable Giving
Defined Benefit & profit sharing Accounts
Defined Benefit & profit sharing Accounts
Directing appreciated assets to a charity enables you to claim a deduction for their fair market value, thereby exempting you from capital gains taxes on their appreciation, unlike selling the assets. Additionally, by donating assets without selling, you can reduce your overall Adjusted Gross Income, potentially qualifying you for various
Directing appreciated assets to a charity enables you to claim a deduction for their fair market value, thereby exempting you from capital gains taxes on their appreciation, unlike selling the assets. Additionally, by donating assets without selling, you can reduce your overall Adjusted Gross Income, potentially qualifying you for various tax credits and deductions that might otherwise be unavailable. Furthermore, Qualified Charitable Distributions from Individual Retirement Accounts (IRAs) can be considered for older donors. Donor-Advised Funds offer the flexibility to make larger donations during periods of higher income. These donations can be distributed to charities over several years, but the tax deduction is permitted in the year the funds are contributed.
In the unlikely event you receive a tax notice, we have an entire audit defense department ready and available to help. We partner with Protection Plus $1 Million Tax Audit Defense so that we can work towards a favorable resolution in every situation our clients might face.