We, at Magellan Planning Group, believe effective planning is only obtained when all the relevant aspects of a client’s estate have been coordinated—legal, financial, and taxation.  That’s why the attorneys, financial advisors and Certified Financial Planners™ of Magellan Planning Group have coordinated the three disciplines to the best benefit of our clients.  Such coordination is an ongoing effort, and often needs re-checking.  Luckily for us, Congress has set April 15 as a “check-up” reminder.  Since paying your income taxes is an ongoing event, so should be your efforts to mitigate these taxes.

Magellan Tax Consultants, LLC consists of a small, hand-picked, and very selective network of tax professionals that embrace the same principles of disciplinary coordination and pro-active tax planning.

Tax planning means actually taking some tax-saving actions prior to the end of the taxable year. By January 1st, it's too late.  If your intent is to pay your current accountant simply to record history without providing direction, then meeting in April is fine.  If, however, you are like our clients, you would prefer to take action now to reduce your tax burden immediately and certainly before the end of the year.  It is also important to manage any tax issues that may arise during the year as they occur, not next April.

The first meeting is usually a review of your tax history, and your ongoing tax liability.  We generally like to review the last three years of returns, and focus on tax liability that is inefficient.   Two of the more common examples of inefficient tax liability include a mischaracterization of long-term capital gains to short term capital gains or ordinary income, and paying ordinary income taxes on investment returns—especially interest bearing instruments like CD’s or corporate bonds.  We will help you find strategies to avoid that tax burden.

The second meeting will address specific instances of tax inefficiency and offer solutions.  The goal here will be to take whatever action is necessary before the end of the year, so that next year’s taxes are less burdensome.  In some instances, it is possible to recharacterize enough other income to reduce or even completely rid yourself of taxes on social security benefits.

As with any income tax planning strategy, the focus should be on cash flow—and paying taxes at the lowest possible bracket whenever possible.  Because our tax code includes several separate tax characterizations and brackets, balancing between a long term capital gains rate and an ordinary income tax rate can make a significant overall difference in your after tax income and indeed, investment results.