Wealth Management & Financial Planning

Wealth Management & Financial Planning

Tax Considerations Are Right Around The Corner

Fall is on its way and brings about many changes. Autumn’s beautiful foliage arrives. Thanksgiving and Christmas approach. Another year begins to wind down. During this season of transition, the average family does not think much about taxes.

Of course, you are not average, or you would not be taking time to read this column. Now is the time to conduct 2021 tax planning and think about 2022 tax planning as well. A proactive approach to tax planning now can help you make material changes while there is still time.

Soon we will send out our annual Tax Planning Package to the families we serve. The Tax Package asks individuals whether they have experienced various life events in the previous year. It also asks about events in the past year that may have affected parents or adult children.
Most people benefit from conducting intentional and comprehensive tax planning annually. The Tax Package we refer to above focuses specifically on identifying situations that may impact an individual’s tax status.

Marriage, the death of a spouse, and divorce may all change how income is reported to the IRS. Certain birthdays can also affect taxes. Have you reached the magical age of 59.5 or 70.5? Rules governing tax-deferred withdrawals begin to change at these milestone birthdays. While taxable income does not change, new rules and responsibilities affecting taxation come into play.

Families often question why we ask about the situations of parents or adult children. First and foremost, we want them to be aware of opportunities to reduce tax liability. We also realize that tax planning is the last thing on people’s minds when significant life events happen. It is not natural to consider the tax implications that accompany being laid off or divorced. Nor is it natural to think about income taxes upon receiving a terminal diagnosis. Regardless of life’s events, taxes march on. Our objective is to help individuals minimize financial burdens and make the most of a potentially bad situation.

The Tax Package serves as a reminder of year-end tax planning. It also helps individuals prepare for the year ahead. What do you expect in 2022? Perhaps you’d like to contribute to a church-building fund. Maybe you are planning a wedding. Retirement will undoubtedly affect your income. Any of these future issues should prompt financial considerations today.

Many people believe there are two tax codes: one for the rich; one for the poor. I disagree, I think the two codes are, one for the informed and one for the uninformed. Sadly, some people know they should do something about their tax situation but never take action.

Please don’t make the mistake of saying, “My CPA takes care of this.” Even the best professionals cannot turn back time. Once midnight arrives on December 31, many options you have now will be lost forever. Give us a call to request your Tax Package so we can assist you in considering all of your options.

Joseph A. Clark is a Certified Financial Planner and Managing Partner of The Financial Enhancement Group, and an SEC Registered Investment Advisor. Contact Joe at yourlifeafterwork.com or 800-928-4001. Securities offered through World Equity Group, Inc. Member FINRA/SIPC. Advisory services can be provided by the Financial Enhancement Group (FEG) or World Equity Group. FEG and World Equity Group are separately owned and operated. World Equity Group, Inc. does not provide tax advice. For tax advice consult with a qualified tax professional.

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