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When Tax Planning Matters

November 26, 2019
The certainty of having to pay taxes only seems relevant to most people when it’s time to file. When people neglect to plan for taxes over the course of their lifetimes, they end up facing an unfortunate likelihood: paying more taxes than necessary. Taking the time and effort to plan for taxes saves you money in the short term, helping you in the long term.  This pre-planning can make all the difference when you’re on fixed income or when your estate is passed on.

Short Term

Making a tax plan at the beginning of the year can help lower your tax bill by ensuring that you are taking advantage of as many tax strategies as possible. The best way to make sure you haven’t missed anything is by going over your tax situation and strategies with an accountant or qualified financial advisor.

Long Term

Maximizing retirement plans, paying down debt, saving for big expenses like college tuition for your kids or grandkids, unexpected medical bills that may arise- these are areas that tax savings can be applied to to help ensure long-term financial stability. Overall, the more you save on taxes, the more you have to put toward your financial goals.


As you plan for your retirement and continue to contribute to your 401(k) plan or IRA, it is helpful to know the amount you contribute annually can be deducted from your taxes annually. Understanding contribution limits, potential employer matches, and catch-up contributions can help your 401(k) optimize it’s potential. It takes a lot of money and careful planning to retire comfortably, and a tax plan is an essential part of the process.


When you think about what you hope to leave behind for your heirs or your favorite charity, you might not initially consider the tax ramifications. Knowing the tax consequences of each account can help you build a plan where your assets go to the most tax-advantageous beneficiary. You can also take advantage of the annual gift tax exclusion by transferring funds to your heirs while you are still alive. Donor-advised funds, life insurance, and various types of trusts can all offer other solutions to the tax aspect of your legacy.


Copyright © 2019 This article is published in its original form from its original publication with Investment Answers and Integrated Concepts, a separate, non-affiliated business entity. The original newsletter publication, Investment Answers Financial Success Fall 2019, is intended to offer factual and up-to-date information on the subjects discussed but should not be regarded as a complete, evolving, or personalized analysis of the topics, and should not be construed as personalized investment advice. Qualified financial professionals should be consulted before implementing a personalized financial plan. Please reference the original publication for additional disclaimers.