Personal Tax Planning [top]
A certain mystique surrounds tax-planning strategies. Our goal is to dispel the mystery, while making sure that you pay no more than the law requires. We focus on several tax-cutting measures, including:
- Splitting income among several family members so that more income is taxed in lower tax brackets.
- Shifting income from one year to another so that it’s taxed at a lower rate.
- Shifting deductions from one year to another to place them where the tax benefit will be greater.
- Deferring tax liability through certain investment choices and through pension plan contributions.
- Structuring your affairs to obtain tax deductions for enjoyable expenses, such as vacation homes.
- Investing your money to produce income that is exempt from federal and/or state income taxes.
We continuously monitor tax law changes and recommend sensible adjustments, using a combination of tax-saving strategies tailored to your personal situation.
Personal Tax Return Preparation [top]
Unless your financial affairs are extremely simple, it’s likely that you’ll benefit from the help of a tax professional. It’s too easy to overlook deductions and credits, of which you’re entitled, if you prepare only one return a year. Even the use of computer software is no substitute for the assistance of a seasoned tax preparer. McCoy Foat prepares hundreds of tax returns annually. We know what to look for and how to identify money-saving opportunities. More importantly, you’ll have a seasoned tax professional who will answer your questions and provide practical financial tax advice throughout the year.
Estate Planning and Wealth Management Strategies [top]
Failing to plan for your estate can mean the government, rather than your heirs, will take a big cut of your hard-earned money. With a little planning, you can save thousands of dollars. We encourage you to keep track of how much your estate is worth. To figure it out, add up the value of all your assets, including life insurance. If the total value exceeds the exemption amount, it’s time to consider a few simple planning techniques that can save your family at estate time. In addition, we’ll help you understand how some effective estate planning ideas can also cut your current income tax bill.
- Gifting – Current tax law allows you to give away $12,000 per year, per family member. Your spouse may join in the gift, even if he or she is not an owner in the transferred asset. This means that you could transfer up to $24,000 annually to each of your heirs. To double the annual exclusion yet again, you may want to include spouses of your children. The person receiving the gift does not need to be related to you. These annual gifts do not reduce your once-in-a-lifetime estate tax exclusion.
- Property transfer – If you have property that is not needed for your retirement, maybe it’s a candidate for transferring during your lifetime. If it is a large income-producer, the future income will be taxed to the new owner and not to you, plus the property will be out of your estate.
- Spousal transfer – Generally, unlimited transfers can be made to your spouse either during your lifetime or through your estate. There are generally no taxes on spousal transfers, regardless of size. But leaving everything to your spouse may not be a good idea, since doing so fails to utilize the lifetime exclusion amount in the estate of the first spouse to die. Planning will allow you to use the exclusion in both estates, and you'll be able to transfer twice as much to your heirs free of estate tax.
- Life insurance proceeds – Proper planning can ensure that certain life insurance proceeds are kept out of your estate.
Retirement Planning [top]
Looking forward to retirement? We’ll help you achieve your dreams with smart, easy-to-implement financial strategies.
Investment Analysis [top]
While taxes should not drive your investment strategy, understanding how taxes affect your earnings helps you minimize taxes and maximize your return.
- Capital gains carry a favored tax status. Consider putting more dollars in investments that return capital gains.
- You can take an annual deduction of up to $3,000 of capital losses in excess of capital gains. Consider balancing your winners and losers to maximize this deduction every year.
- Investments which produce high taxable annual income can be given to family members who are in lower tax brackets, thereby saving taxes from the overall family group.
- Depending on your tax bracket, you may benefit from investing in municipal bonds.
We’ll review ideas with you and your investment advisor and make recommendations, like those referenced above, to maximize your after-tax return.