Tax Advice and Tax Planning

We include tax planning because we know that without reducing the amount you owe in taxes, the road to financial independence is much longer. We find that the most successful and effective plans are those in which everything is working together toward one common goal.

Are you withholding enough to avoid tax penalties? How much can we estimate that you will owe? What can we do now to reduce that amount? How can you pay less money in taxes so that you can re-allocate those funds toward reaching your goals? How much do you need to take for your required minimum distributions? Do you have capital losses or gains that you should consider taking before year-end? If so, should you buy the investment back again? When?

We often tell clients that there are several reasons why we do comprehensive planning, and this is just one of them.

While we would never promise you a 28–35% return on your investments (and no one should!), we feel that with good tax planning, if we can help save you $1 in taxes, in essence, that's approximately a 28–35% return!

We strongly believe in tax planning and, with retainer clients, will do an annual tax planning appointment and analyze whether they should change their payroll withholding, whether they should make any changes to their portfolio, and what are the best tax-saving strategies for them to implement.

Who Pays Taxes?
Upper incomers continue to bear a record share of the income tax burden. The top 1% of filers paid 40.4% of all federal income taxes, up from 39.9% in the previous year, according to IRS data for 2007, the most recent year available. Yet those taxpayers made just 22.8% of the total reported adjusted gross income. The minimum level of AGI needed to be in the top 1% hit a new high—$410,100.

The highest 5% paid 60.6% of total income tax and made 37.4% of all AGI. They each had adjusted gross incomes of at least $160,000. The top 10% of filers, those who had AGIs of $113,000 or higher, bore 71.2% of the overall tax burden, while garnering slightly more than 48% of the total of adjusted gross income.

The bottom 50% of all filers paid just 2.9% of the total income tax bill. Their share is so low because Social Security taxes are not included in the figures and because many of them get substantial tax relief from the earned income credit.