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Elevate Your Tax Savings Game

Elevate Tax Savings - Denver CPA

Strategic tax planning is an effective cost management tool that individual and business taxpayers rely on to annually optimize tax positions. It encompasses a comprehensive review of the taxpayer’s situation which includes detailed information on financial planning and investments. Armed with this information seasoned professionals can evaluate a situation and determine the best plan. However, for the approach to be effective there must be regular communication between the Certified Public Accountant (CPA) and financial advisor. Without working together opportunities can be missed and potential savings lost. There are several areas where CPAs and financial advisors overlap. It is important to ensure your tax planning takes advantage of intersectional opportunities. To help clients, prospects, and others, WhippleWood CPAs has provided a summary of the key details below.

Intersectional Opportunities
There are many examples where having a collaborative approach to tax and financial planning can come in handy:

  • Capital Gains: Taxable income can come from capital gains, either from regular or one-time contributions to income. To make the most of these moments, capital gains events should be paired with strategies that can defer or minimize the associated tax burden. For example, a property sale can be a good call from a financial planning standpoint, but planners may not think about the tax implications the way a CPA would.
  • Tax Brackets: While growing a business can be positive from a financial planning standard, certain situations can trigger particularly high effective tax rates that could be balanced with tax-advantaged investment options, such as Roth IRAs or municipal bonds. If financial advisors are not aware of a client’s tax situation, they may not propose these options. Failure to think of these strategies can lead to higher tax burdens. CPAs can also help individuals understand when they are reaching certain thresholds that may make them subject to surcharges, such as excise taxes for Roth IRA contributions for taxpayers who make above a certain income.
  • Social Security: One consideration for tax brackets is Social Security. Because of the unique way Social Security is taxed, it can push someone into a higher marginal tax bracket, which can lead to their income being inadvertently taxed at a higher rate.
  • Charitable Giving: Giving can be particularly advantageous for individuals in higher tax brackets, especially with the Pease Limitation lifted through the TCJA. Maximizing tax deductions through charitable giving requires the know-how of tax professionals combined with the overall personal, business, and retirement planning goals a financial advisor can offer.
  • College Financial Aid and Tax Planning: Families with children heading to college also need to think about the tax implications of different education-based financial decisions, especially income limits and need-based financial aid. Balancing eligibility for aid with creating a sound future financial plan is key. Parents with children who are not yet at college age need to consider adding 529 plans into their financial strategies.
  • Retirement Planning: CPAs can help choose suitable retirement accounts based on current and future tax brackets, and financial advisors can provide information on where their client is headed so CPAs can make better projects and plans. Tax experts can also help individuals make efficient tax withdrawals.
  • Investing: A financial planner may tell a client to diversify their assets, but a CPA can use plans about how much a person wants to invest and help them understand the tax implications of different investment types, helping them allocate investments across different accounts based on financial goals and tax characteristics. Meanwhile, financial advisors can make suggestions to offload investments yielding less-than-ideal returns in exchange for those that are performing well.
  • Paying Taxes: Of course, one of the main considerations for individuals throughout the year when it comes to tax planning is ensuring they can pay taxes when needed, employing estimated payments, withholding, and annual returns. Financial planning can help taxpayers understand how much they are likely to make during a year, and tax planning can help them set aside what they need to pay in a timely manner.

Contact Us

Multi-skilled CPAs can help individuals optimize their strategic approach to finances while minimizing their tax burdens. These accountants will be well-versed in both tax strategies and financial approaches individuals can use, whether they’re planning for retirement, growing their business, or preparing for other major life moments. If you have questions about the information outlined above or need assistance with strategic tax planning, WhippleWood CPAs can help. For additional information call 303-989-7600 or click here to contact us. We look forward to speaking with you soon.