tax planning

While the federal income tax rules are now more complicated than ever, the benefits of good tax planning are more valuable than ever before. We go beyond tax compliance and proactively recommend tax planning and tax saving strategies that permit you to do what you want while reducing your tax bill along the way.

I&U CPA is committed to providing you the highest quality service and will work with you to help navigate through the complexities of financial and tax planning, new and changing tax laws, estate planning and business succession issues. Our CPAs approach each situation with experience, intelligence and independent judgment.

Our individual and business clients pay the lowest amount of taxes allowable by law because we continually look for ways to minimize your taxes throughout the year, not just at year end.

As a new client, you will immediately benefit from following Tax Planning & Analysis:

  1. Due Diligence Review of your prior year Tax Return
  2. Tax Refund Claims if an error was made on your prior year Tax Return
  3. Tax Optimization

We recommend Tax Saving Strategies that help you:

  • Reduce taxes on your investments so you can grow your wealth faster.
  • Defer or avoid income so you can keep your money now and pay taxes later probably at a lower rate.
  • Maximize deductions against your income so you keep more of what you made.
  • Minimize the effect of the AMT on this year’s tax liability.
  • Maximize tax savings by taking advantage of available tax credits.
  • Minimize the Medicare Contribution Tax on net investment income.
  • Avoid penalties for underpayment of estimated taxes.
  • Increase availability of cash for investment, business, or personal needs by deferring your tax liability.
  • Manage your cash flow by projecting when tax payments will be required.
  • Maximize the amount of money you will have available to fund your children’s education as well as your retirement.
  • Reduce taxes on your gifts so you can give more.
  • Reduce taxes on your retirement distributions so you can enjoy your golden years.
  • Reduce taxes on your estate so your family keeps more of your wealth.

Here’s a few of the Tax Saving Strategies we use:

  • Splitting income among family members or legal entities to get more of the income taxed in lower tax bracket.
  • Shifting income or expenses from one year to another in order to achieve reduced effective tax rate.
  • Deferring tax liabilities through certain investment choices such as retirement plans.
  • Using certain investments to produce income that is tax exempt from either federal or state.
  • Finding tax deductions by paying for things you enjoy, such as a vacation home.

Key Tax Planning Strategies:

The regular tax rate applies this year and is higher than the AMT rate that you expect will apply next year.• Prepay deductions, especially if they are not deductible against the AMT and would therefore be lost next year. These deductions include state and local income taxes, real estate taxes, and miscellaneous itemized deductions such as investment fees.
• Defer income.
This year you are in the AMT and next year you will be subject to a higher regular tax rate.• Defer deductions, especially those not allowed against the AMT that would be lost this year.
• Accelerate income.
You have net realized capital losses this year or loss carryforwards from last year.• Consider recognizing capital gains by selling appreciated securities to offset realized losses and loss carryforwards, thereby locking in the appreciation.
You have net realized capital gains this year.• Sell securities with unrealized losses to offset the gains if market conditions justify it.
• Use a bond swap to realize losses.
• Consider tax implications of netting rules.
• Avoid wash sale rules.
• Consider the implications of the Medicare Contribution Tax on net investment income.
Your miscellaneous deductions will be reduced due to the limitation based on 2% of your AGI.• Bunch these deductions into a single year, thereby increasing the deductible amount. Make sure you avoid the AMT. To the extent that these deductions are investment expenses they can reduce the Medicare Contribution Tax on net investment income.
A penalty for underpayment of estimated taxes will apply.• Withhold additional amounts of tax from your wages before December 31.
• Prepay fourth quarter estimates due January 15 and increase the payment amount, if necessary.
• Have withholding taken out of your retirement plan distribution.
You want to diversify a concentrated low-basis stock position and avoid paying taxes currently.• Consider using a charitable remainder trust that will allow you to sell the stock in exchange for an annuity. This will allow you to defer the tax while benefiting a charity of your choice.
You have incentive stock options that you can exercise.• Consider exercising your options to start the long-term holding period, but only if the spread between the market price of the stock and the exercise price will not put you into the AMT.
Your passive activity losses exceed your passive income.• Dispose of an activity that is generating passive income in order to deduct the suspended loss on that activity. However, consider the impact of the Medicare Contribution Tax on net investment income on net passive income.
You would like to make significant charitable contributions.• Donate appreciated securities you have held for more than one year.
• Consider establishing a charitable trust or a private foundation, or take advantage of a donor-advised fund.
• Consider donating partial interests in certain assets such as a conservation easement, remainder interest in real estate or art work to a museum.
You need funds for personal use, such as improvements to your home in excess of the mortgage limitations or to pay tax liabilities.• Sell marketable securities with little or no appreciation to fund your needs, and then use margin debt to purchase replacement securities. The interest on the debt will be deductible, subject to investment interest limitations. The interest may also reduce the Medicare Contribution Tax on net investment income.
• Take distributions, if available, from partnerships, limited liability companies, or S corporations on income that you have already paid taxes on. Be sure you have sufficient tax basis and are “at risk” in the entity.
You want to take advantage of the tax-deferred nature of retirement accounts.• Maximize your contributions to your retirement accounts and take advantage of the best plans available to you prior to December 31.
You expect the value of your IRA to appreciate over time, and you want to position your IRA now so that there will be little or no tax impact when you or your beneficiaries take distributions later.• Consider converting your traditional IRA into a Roth IRA in the current year. However, this will cause a current tax liability, since the converted amount is subject to income tax in the year of the conversion.
You have a sizeable estate and want to protect your assets from estate tax.• Make gifts of $14,000 (effective for 2016) to each individual every year.
• Pay beneficiaries’ tuition and medical expenses directly to the providers.
• Use your lifetime gift tax exclusion of $5.45 million effective for 2016; for subsequent years, the exclusion will be indexed for inflation.
You want to transfer assets to your designated beneficiaries during your lifetime.• Create a grantor retained annuity trust.
• Set up a family limited partnership or family limited liability company.
• Make loans to your beneficiaries at minimum required interest rates.
You want to provide for your children’s and/or grandchildren’s qualified education costs.• Establish and fund a 529 plan that can grow tax-free as long as you use the funds to pay for qualified education expenses.
You and your spouse are a legally married same-sex couple.• Review your income and estate tax filings to determine if any tax refund claims should be filed.
• Review and update your estate plan.
• Review health and retirement plans and Social Security benefits.

Remember, we work for you not for the IRS. Many of our clients save many times the fee in reduced taxes through our legitimate tax strategies and execution. When you work with us we make tax planning part of your overall business strategy and not just something we do at year-end. Our Tax Accountants provide individual and business clients with tax expertise you can count on all year round.

If you’d like to receive more information about our Tax Planning services, please complete the form below.

Tax Planning Service Request