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Roadblock Taxes

Roadblock Taxes

| February 27, 2018

In my blog post dated January 23, 2018, we addressed the fourth of six roadblocks to creating a financial plan: Inappropriate Investing. I wrote about how investors’ biases can greatly affect their investment decisions.  

The fifth roadblock to financial planning success is: Taxes.  Tax planning is a critical factor in financial planning.  Almost all financial decisions have a tax impact.  If you do not take steps to manage your taxes they can impose a heavy burden.

According to the Tax Foundation, American workers spend more of their day working to pay taxes than they do to pay for food, clothing, and housing combined.  That is an alarming thought.  In addition, the Tax Foundation estimates that you will work from January 1st until late April to pay your annual tax liability. *

We have heard the story before.  Mitt Romney, multi-millionaire congressman, paid an effective tax rate of roughly 14%!  How is it possible that someone making that amount of money pays a lower tax rate than most Americans?  The answer?  Proper tax planning. 

To quote a famous opinion from Supreme Court Judge Learned Hand, “Over and over again courts have said that there is nothing sinister in so arranging one's affairs as to keep taxes as low as possible.  Everybody does so, rich or poor; and all do right, for nobody owes any public duty to pay more than the law demands: taxes are enforced exactions, not voluntary contributions.  To demand more in the name of morals is mere cant.”

We at Petra Financial Solutions help our clients envision potential tax impacts of financial choices and overall financial needs when making estate, retirement, investment and risk management decisions.  We also assist in the implementation of helpful tax strategies such as:

  • (Investment Strategies) Taxation of investments
  • Tax planning for income distributions
  • Tax planning with life insurance
  • Harvesting Gains / Tax-loss selling
  • 529 plans
  • Roth IRA conversions
  • Maximum utilization of “tax capacity”

Being aware of the tax implications of your decisions can save you valuable dollars now and in the future.

Until next time, cheers!


*Source: Tax Foundation, 2008

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