Tax Planning

Tax planning is the analysis of a financial situation or plan from a tax perspective. The purpose of tax planning is to ensure tax efficiency. Through tax planning, all elements of the financial plan work together in the most tax-efficient manner possible. Tax planning is an essential part of an individual investor’s financial plan. If successful, a tax plan will reduce your tax liability and maximize wealth.


One of the best tools for tax planning is a tax forecast, sometimes called a tax projection. A forecast works great for answering all of those “what if” questions. For example: What happens if I buy a house? What happens if I get married? What happens if I sell these stocks?

A tax projection allows us to estimate your tax liability based on your estimated income, expenses, and withholdings for the year. We start by making a model with your year-to-date information and then forecast, or project, it forward to look at the whole year. We can also layer in different items to see how they affect the tax liability. This can be done for multiple years to plan the best time to dispose of securities, retire, sell a property, or exercise Incentive stock options. 

Strategies that could apply to you:

Investing in tax exempt investments.

Moving income or expenses from one year to another.

Deferring tax liabilities using retirement plans

Finding tax deductions by structuring your money to pay for things you enjoy, such as a vacation home.

Quarterly Estimated Payments


Saving via a retirement plan is a popular way to efficiently reduce taxes. Contributing money to a traditional IRA, 401k, or SEP IRA can reduce taxable income. Contributions to Roth IRA will grow tax-free into retirement.

Long Term Capital Gains & Loss Harvesting

Long-term capital gains are taxed based on the tax bracket in which the taxpayer falls. The rates can be:

  • 0%
  • 15% 
  •  or 20%

These are very beneficial rates which you want to take advantage of.  Planning when to hold and sell stocks can make sure you make the most of these special rates.  

Incentive Stock Options

  • Incentive stock options (ISOs) are a type of employee compensation in the form of stock rather than cash.
  • ISOs are taxed in a few different ways depending on the purchase price, fair market value when exercised, and the sale price.  These items affect your ordinary income and your alternative minimum tax (AMT).
  • These create a wonderful opportunity for tax planning. Using a tax projection, we can help you avoid the alternative minimum tax and guide you through a qualifying disposition. This will ensure that you pay the lowest amount possible on your ISOs.