Now is the time for effective tax planning

Today is June 30, 2014; the year is half over. Now is the time to be effective in planning and implementing changes that will be effective in reducing taxes. Those who wait until the last quarter will – like those in every other year – be told that tax planning strategies are “too little too late”.

I’ve been involved in the tax planning process for individuals and small businesses for more than two decades. We (tax planners) repeat this same message personally and in the media every year. Yet only a relative handful of prudent people take the time in the third quarter to be effective in using the tools that can reduce or eliminate income tax liability. So here we are again saying that there are plenty of ways to improve your net results by lowering taxes ONLY IF you take the time to develop a strategy now.

The tax planning process begins with a review of last year’s tax return and a computer-aided projection of the current tax year’s tax return. To save time, I begin this in advance of a discussion with you and we review the findings together. This part is the equivalent to an annual physical exam with your physician. Then the human factor takes over with a creative discussion of “what if” scenarios to gauge the appetite for a range of possible. Although it is not the central purpose of this procedure, it is surprising how often we discover mistakes in last year’s tax return or other important issues not directly related to tax planning.

The most difficult part of the process comes next with a discussion that flushes out a complete list of advantages, disadvantages. proponents and objections for each possible option that leads to a selected strategy. This step may be further complicated by the different objective of the parties and stakeholders. Even so, the whole annual tax planning process can often be accomplished in a few hours of discussion at a cost of less than $1,000 – typically a small fraction of the savings realized. Income tax planning, IMO, produces the highest, most immediate and tangible financial payoff of any type of financial planning.

My own private practice has moved proactively – and perhaps a bit ahead of market demand – to ensure that I can deliver mid-year tax planning service in a secure multimedia format (document review, transmittal and storage, video-based discussion and effective follow-up) remotely to make it harder for my busy business owner and professional clients to postpone this important and profitable task.

I challenge you to commit to investing a small amount and a few hours right now to save thousands of dollars on your tax return at next spring’s filing season.


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