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What makes us distinct is we provide a comprehensive view of your financial life and all the factors that go into life planning. What this means to you is help with personal decision making and putting a date on things. We help you manage your finances and investments, while taking into consideration tax planning, professional moves, kids, retirement, healthcare and other important priorities. It’s about life planning and gaining more comfort with your long-term financial security.
 

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Increasing Taxable Income as a Tax Savings Strategy!
Posted By:  Rob Lemmons CFP®, CPA, AIF®, CEPA
Thursday, May 30, 2019

Increasing Taxable Income as a Tax Savings Strategy!

Who’s managing your tax situation? Not a worry? What tax software is your advisor using?

Proactive tax planning throughout the year is the key to reducing taxes and maximizing your wealth accumulation. This is accomplished by applying changing tax laws to your specific situation. Sometimes the most prudent strategy for long term wealth accumulation is actually to generate additional taxable income.

Increasing Taxable Income?

Contrary to the typical advisor, Total Wealth Planning strategies look beyond the current tax year. By doing this, our strategies could include increasing your taxable income to take advantage of the current multi-tiered tax system. Believe it or not, paying little tax or no tax at all could be a very bad idea.

Here’s why:

Continuing to defer income to future years and only focusing on the current year could have the reverse effect and actually push you into a higher tax bracket in the future years. Why is this? At age 70 ½ individuals who have Individual Retirement Accounts (IRA) are required to begin withdrawing from their IRA each based on a provided IRS table. Thus, the growth of an IRA could cause these Required Minimum Distributions (RMD) to be taxed in a higher tax bracket. This can also result in a substantial increase in your yearly Medicare insurance premiums.

If you anticipate higher income tax rates in the future or happen to have low income in a certain year, then increasing income through converting a regular IRA to a Roth IRA, known as a Roth Conversion or accelerating long term capital gains could save you significant taxes in the future.

The tax strategies involved with this type of planning are complex and requires the guidance of a trusted and experienced advisor, such as a fee-only Certified Financial Planner™ (CFP®) and CPA, who plans comprehensively, and with a complete understanding of your particular concerns and goals in life. At Total Wealth Planning we focus on minimizing your tax liability over your lifetime and the next generation’s lifetime.

For more information about the tax planning strategies we utilize, please visit us at www.twpeam.com or contact directly Rob Lemmons, CFP®, CPA, AIF at 513-984-6696



 
 
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