Filing a tax-return is generally a backward looking event. Tax preparers use income and deductions from the previous calendar year to complete your tax-forms. The issue with this is that sometimes an action, such as a retirement account withdrawal, creates a tax liability that isn’t understood until it’s too late. In contrast, tax planning is the forward looking process of estimating the tax impact of a specific action or broader strategy. If taxable events are identified before a calendar year is over, oftentimes these can be offset or mitigated with a variety of strategies.
Regularly reviewing a tax return and proactively planning can help retirees avoid tax-traps and avoid paying more than necessary. Our review process is always on the lookout for: