In this April 2022 issue, you will find the following articles:
- Tim Jaynes, ISC Financial Advisors
- Branden McDonald, McDonald Insurance Agency
WHAT IS TAX PLANNING AND WHY IS IT SO IMPORTANT?
Often overlooked, proactive tax planning is one of the most valuable pieces of a complete financial plan. Tax planning consists of a review of your most recent tax return overlayed with your financial goals, current cash flow, and retirement plan to identify potential planning opportunities - both now and in the future – to optimize a strategy focused on keeping your lifetime tax liability as low as possible. This is different from tax preparation (usually performed by a paid-preparer, CPA, or an online service like TurboTax), which focuses on complying with required filings with a tendency to attempt reducing your current tax liability without consideration of the consequences of those moves in the future.
WHY IS TAX PLANNING IMPORTANT?
Taxes touch every part of your financial life. Your tax return is a financial fingerprint: it is unique to you, complete with valuable clues and information buried in dozens of pages of complex and hard-to-comprehend forms. Understanding your unique tax situation equips you, your tax advisor, and your financial planner to have more valuable and actionable conversations. Additionally, demystifying the world of income taxes can help you understand why integrating a robust tax planning process is an important part of your financial picture.
WHO IS TAX PLANNING FOR?
Everyone! Regardless of your income sources or amounts, anyone who pays income taxes can benefit from having a professional review of your tax return to identify relevant planning opportunities. At worst, you may conclude that you are currently maximizing every available tax saving opportunity, both today and in the future. That is great “peace of mind” news. Alternatively – and more frequently – you may identify a handful of saving opportunities in the current and future years.
Often, our team identifies that the conventional wisdom of deferring taxes as long as possible is not the most tax-efficient strategy for most families. Whether it is transitioning from living off income from employment to distributions from retirement accounts or the sale of a business, coordinating these decisions with other areas of your financial picture can significantly impact the after-tax value of your assets.
WHAT KIND OF OPPORTUNITIES MIGHT BE IDENTIFIED?
Several opportunities may be identified during a tax planning process, including topics like coordinating savings utilizing the most tax-efficient account types, present-day charitable giving strategies, leaving a legacy to your children, church or charities, targeted capital gain recognition, ROTH IRA conversions, tax credit eligibility, taxation of Social Security, and more.
LET US KNOW IF WE CAN HELP.
While the subject matter is extraordinarily complex, we have various tools and a team of experts that can simplify and effectively communicate recommended strategies. We can model a variety of tax code environments to evaluate hundreds of different strategies to focus on creating the most efficient approach to your specific goals. We can run projections to see how potential changes (e.g., filing status, dependents, the sale of a business, stock option exercises, acceleration, or delay of income, etc.) may impact your tax liability today or in the future.
Thanks for taking a look.
ISC Financial Advisors
IS YOUR BUSINESS AT RISK FOR EMPLOYMENT PRACTICES LIABILITY CLAIMS?
If your business has employees, the short answer is yes. As business owners we strive to provide a safe and comfortable work environment for our employees and yet a lot of what happens in your business is out of your control.
Employment Practices Liability Insurance (EPLI) provides business owners of all sizes with protection against employment-based lawsuits. This can include wrongful termination, discrimination, and harassment. Even when business owners do their best to provide a safe environment, we can’t always control how our employees interacts with each other, which is one of the most common EPLI claims scenarios. Another major cause of EPLI claims is wrongful termination, due to claims such as age discrimination or violation of other Federal employment laws.
We advise our clients that even if you have followed the rules and have excellent documentation, you are still at risk of a lawsuit. EPLI provides legal defense on top of punitive damages. Your carrier will work with you or your HR staff to defend the claim without the large cost of hiring your own lawyer. Without EPLI coverage, even if you win the claim – you still lose due to defense costs.
And remember that EPLI can protect your business from past, present, and prospective employees that can file an employment claim against you.
EPLI pricing is based on the number of employees, the amount of coverage and the type of business you have but many clients are surprised at how reasonable the premium is. The coverage can be added to your current Insurance Package or as a stand-alone policy.
We highly recommend some level of EPLI protection for any Business that has employees. The best approach is to work with an Independent Agency to discuss your specific needs.
McDonald Insurance Agency
1810 Crest View Drive – Hudson WI