Over the last few weeks, we have been revealing our financial planning process at a high level. We started with goal setting and have progressed through various topics such as budgeting, retirement, insurance, and estate planning.  Last week we talked about estate planning and the importance of ensuring that your assets pass to your heirs like you would have intended.

This week we will cover tax planning. Tax mitigation permeates almost every financial planning meeting we have with a client. Because we recognize that various planning topics do not act in isolation, we recognize the importance of ensuring that a planning decision does not adversely impact your tax situation. While we do not prepare taxes here at Verisail, we do become a “second set of eyes” for your tax situation. Our primary objective here is to fully understand your financial situation and minimize your tax burden. We often find that a client’s relationship with their CPA is no more than providing year end tax documents and getting their tax return prepared.  There are often various year end moves you can make to help minimize your tax liability. However, we have seen that this rarely happens. By understanding our client’s situation inside and out, we often can provide a few strategies to help them lower their overall tax burden.

Since taxes is a very broad topic and looks different for each client, I wanted to share a few tax tips for 2017 and beyond related to your portfolio.

  • Asset location in retirement accounts: Reorganize your investments so that tax inefficient assets that are taxed more are placed into traditional and Roth IRA accounts.  And place tax efficient assets, such as muni bonds and growth stocks into your taxable accounts. This strategy, called asset location, can not only reduce your annual tax bill, but also help to increase your after-tax investment returns.
  • Tax loss harvesting: If you are in a high tax bracket or have substantial capital gains in a given year, consider doing some tax loss harvesting to offset these capital gains. By selling investments at a loss, you can generate a tax deduction. You can use this deduction to offset other investment gains you earned during the year, or even to decrease your taxable income by up to $3,000.
  • Don’t wait until April to contribute to your IRAs for the previous year: It’s true that you have until April 18, 2017 (this year’s tax filing date), to contribute to your IRA for 2016. However, if you’ve already maxed out your 2016 IRA contributions, consider maxing out your 2017 IRA contributions early in the year—this will give you up to 15 extra months (January 2017 to April 2018) in the market.
  • Don’t give Uncle Sam an interest free loan: The average refund is about $2,800. This means that you overpaid your taxes each month by $233. That is money that could have been invested and growing for you throughout the year. To adjust how much money is withheld from each paycheck for taxes for the following year, you could consider resubmitting your Form W-4 to your employer.
  • Make tax smart investment moves: rebalance your portfolio at least annually, but do it in a tax efficient manner. Also, get out of high cost investments. These unnecessary expenses can become a serious performance drag on your portfolio.
  • Backdoor Roth IRAs: For taxpayers that cannot contribute directly to a Roth IRA due to income limits, consider a Backdoor Roth IRA. This strategy allows you to make nondeductible contributions to an IRA and then convert the contributions to a Roth with little to no tax liability.


Taxes is more than just preparing your tax return. With the right planning techniques, you can significantly reduce your tax bill each year and maximize portfolio after tax returns.  The key is being proactive. Don’t wait until December 31st to scramble around trying to figure out ways to lower your tax bill. Talk to an advisor at Verisail and we can help you take advantage of various strategies without adding stress during tax season.


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