Your Map Through the Tax Maze

Getting through the twists and turns of the tax maze can be a challenge. It gets even more complicated when your goal is to minimize the amount you pay. Fortunately, with a little planning, you can bring your bill down, so that you can put more of your money to work building wealth. Certified Tax Coaches (CTC) offers these tips for making tax time less painful.

Assemble Your Team

No matter how financially-savvy you are, there are significant benefits to building a team of expert guides to help you get through the tax maze. Certified Tax Coaches and specialists in retirement planning, investing, and estate planning offer valuable insight into uncommon – but effective – tax minimization strategies.

Conduct an Honest Self-Evaluation

The plan you create is only as good as the information used to build it, which means a self-evaluation of your financial strengths, weaknesses, and goals is a critical step in the process. Before you meet with your Certified Tax Coach, compile all relevant data. This includes detailed information on your current assets and liabilities, as well as honest answers to difficult questions. For example:

• What were your most significant financial errors – and why did they happen?
• What were your greatest financial successes – and how did they happen?
• What lifestyle changes are you willing to make to realize financial goals?

Remember, honesty is the best policy when it comes to financial planning. Your financial advisors can solve most problems, but only if they know the problems exist.

Consider Capital Gains

Nothing throws you farther off the path to financial success than unexpected capital gains taxes. Fortunately, a little forethought can dramatically diminish your capital gains tax liability. Your Certified Tax Coach knows all of the techniques to balance capital gains, from choosing the best possible primary residence to reinvesting your wealth. 

Create a Retirement Plan

One of the biggest opportunities to protect against excessive taxes is a solid retirement plan. Many of the available programs are specifically designed with tax advantages to encourage savings. It does get a bit complicated when the time comes to open an account, as you have multiple options, from Traditional IRAs to Roth 401(k)s. Your plan must also consider contribution limits and distribution requirements. Otherwise, you could face significant penalties from the IRS.

Put Your Trust in Trusts

A lifetime of careful financial planning can be lost to estate taxes unless you act now to prevent future issues. For most people, trusts are the safest, most reliable method of protecting your wealth for your beneficiaries. Of course, if you are considering a trust, you are likely to have a long list of questions. For example, what is the difference between a revocable and irrevocable trust? Should you choose an A trust or a B trust? Selecting the right type of trust and creating an appropriate structure requires a bit of research – or the specialized skills of experts in this area.

These quick tips are just the beginning. Contact a Certified Tax Coach to learn more about each of these strategies, along with answers to your questions about real estate investing, life insurance, taxation of small businesses, and more.