taxes: the start of your financial plan · 4/27/2018 · taxes: the start of your financial plan...

Taxes: The Start of Your Financial PlanTake Charge: Your Money. Your Life.

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Brought to you by 360 Degrees of Financial Literacy and America's CPA Financial Planners

Personal Financial Planning SectionTax | Retirement | Estate | Risk Management | Investments

Quick MessageThe general information contained in this web seminar is provided by the American Institute of Certified Public Accountants as a service to the public and our members. It is not intended to serve as tax, legal or any other professional advice applicable to any particular person or matter.

2 Personal Financial Planning SectionTax | Retirement | Estate | Risk Management | Investments

Presenters

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Sarah Lane, CPA/PFSCLS Financial Advisors, Inc.Portland, OR

• AICPA member• PFS credential holder

Lori Pajunen Luck, CPA/PFSCLS Financial Advisors, Inc.Portland, OR

• AICPA member• PFS credential holder• Past PFS Executive Committee and

Credential Member


Everyone Needs a Plan• Where are you now?

• Where do you want to be in the future?

• Where to turn for help?

• Your Tax Return can help get you there.


360-Degree View• Your tax return gives you a 360-degree view of your finances that you can use to improve your

future.

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File Taxes

Evaluate Tax Strategy

Evaluate Retirement

Strategy

Evaluate Investment

Strategy

Improve Future You


Where Are You Now:• Your tax return tells a story.

– Your stage in life

– How you make your money

– How you spend your money

– How you save your money


Your Stage in Life


How You Make Money


How Much are you Making and Saving?

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75,000

18,500

3,450


How You Spend Your Money• Medical expenses >7.5% Adjusted Gross Income

• Mortgage Interest Expense

• Charitable contributions

• State Taxes


2018 Federal Tax Brackets

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Source: Tax Cuts and Jobs Act

2018 Federal Taxable Income Brackets and RatesRate Single Filers Married Joint Filers

10% $0 to $9,525 $0 to $19,050

12% $9,525 to $38,700 $19,050 to $77,400

22% $38,700 to $82,500 $77,400 to $165,000

24% $82,500 to $157,500 $165,000 to $315,000

32% $157,500 to $200,000 $315,000 to $400,000

35% $200,000 to $500,000 $400,000 to $600,000

37% $500,000+ $600,000+

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360-Degree View

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File Taxes


Evaluate Retirement

Strategy

Evaluate Investment

Strategy

Improve Future You


What's Your Tax Strategy?• Timing income and deductions

• Bunching deductions

• Strategizing Tax Brackets

• Maximizing credits and deductions

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Hint: Visit www.360financialliteracy.org for year-round tax tips.Personal Financial Planning SectionTax | Retirement | Estate | Risk Management | Investments

http://www.360financialliteracy.org/

Lower Income Year• Sell investment at a gain for 0% federal tax

• Optimize Tax Credits

– Health Insurance

– Child Tax Credit

– Education Credits

• Roth IRA

– Contributions

– Conversions from a Traditional IRA


Higher Income Year• Manage Income

– Invest in municipal bonds tax-free

– Offset capital gains by realizing losses

– Stay under $250K to avoid 3.8% investment tax

– Donate from Required IRA Distributions

– Stay under Medicare Part B premium income brackets

• Maximize Deductions

– Retirement (IRA or 401k)

– Health Savings Accounts

– Charitable giving

– Employer Benefits (Dependent care, Flexible spending, Parking)

– Backdoor Roth Contribution


360-Degree View

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File Taxes


Evaluate Retirement

Strategy

Evaluate Investment

Strategy

Improve Future You


Where do you want to be in Retirement?

• What lifestyle do you want?

• How will your expenses change?

• Are you planning for medical expenses?

• Do you have an overall game plan?


Retirement

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Source: 2016 Mid-Year AICPA CPA Personal Financial Planning Trends Survey


Retirement - Planning• Tax Document

– Form 1040

• Key Questions:

– Do you have a plan for retirement?

– Are you maximizing deferral opportunities?

– 401(k), 457, 403(b), IRA

– Do you have multiple retirement accounts?

– Have you considered a Roth conversion?


Retirement - Distributions• Tax Document:

Form 1040

• Key Questions:

– Are you withdrawing at a sustainable rate?

– Are you taking required minimum distributions?

– Over 70 ½ you have to take a required minimum distribution.

– Are you drawing from the right place?

– Pull money from the right pool for tax efficiency.

– Are you maximizing Social Security benefits?


Planning Bonus• Estate Planning Tip: While reviewing retirement documents, check beneficiary information to ensure

it is accurate and up to date.


360-Degree View

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File Taxes


Evaluate Retirement

Strategy

Evaluate Investment

Strategy

Improve Future You


Investments• Are your investments consistent with your goals?

• Does your mix of investments reflect your tolerance for risk?

• Are your investments tax efficient?

• Do your investments consider cash flow needs?


Decrease Debt or Invest?

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401(k)Match*

Credit Card Investment Mortgage

Paid / Received

100.0% Match

Received

-18.0%Interest Paid

8.0%Income

Received

-4.5% Interest

Paid

Tax effect @ 24% -- 0.0% -1.9% 1.1%

Net Paid / Received 100.0% -18.0% 6.1% -3.4%

*Assumes 100% matching of first 3% of your pre-tax 401k contributionsConsider paying down debt when you can’t invest at a higher rate


Investment Considerations• Tax Document:

– Schedule B—Interest & Dividends

• Key Questions:

– Are your investments properly diversified?

– Do you have enough cash for an Emergency?

– Do you have too much cash?

– Inflation Risk

– FDIC Limits

– Need for investment growth


Investments• Tax Document:

– Schedule D—Capital Gains/Losses

• Key Questions:

– Are investment decisions taking into account tax planning?

– Lower capital gains rates; Medicare tax

– What accounts hold taxable vs tax free investments

– Are you harvesting losses?

– Offset capital gains by taking losses.

– Are you carrying losses forward?

– Reduce your future tax bill.


360-Degree View

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File Taxes


Evaluate Retirement

Strategy

Evaluate Investment

Strategy

Improve Future You


Future You• The Plan is only as good as your commitment to it

– Know where you’re headed

– Establish a budget and savings goals

– Protect your assets and financial future

– Develop a clear picture for retirement

– Update the plan: it is continuous process


The Benefits of Planning Ahead• Statistics for households with

incomes of $100,000 or more.

• 2012 Household Financial Planning Survey, Certified Financial Planner Board of Standards, Inc. and the Consumer Federation of America. July 23, 2012.

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0209

.12

% Living comfortably

% Not feeling behind on any specific goal

% Feeling very confident in managing money, savings

and investments

Source: BAM Advisor ServicesPersonal Financial Planning SectionTax | Retirement | Estate | Risk Management | Investments

Where to Turn for Help?

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A CPA Financial Planner and a CPA/PFS are trusted advisors who…• Operate at the highest professional level, acting in the clients’ best interest.

• Integrate advanced tax planning concepts with the entire financial and investment plan.

• Adhere to high standards as required by the Code of Professional Conduct and the Statement on Standards in PFP Services

• Are regulated by state boards of accountancy.


http://www.aicpa.org/research/standards/codeofconduct/pages/default.aspx

http://www.aicpa.org/InterestAreas/PersonalFinancialPlanning/Resources/PracticeCenter/ProfessionalResponsibilities/Pages/PFPexposuredraft.aspx

Resources• 360financialliteracy.org

• findacpapfs.org

• www.aicpa.org/pfp | Consumer

• Among them:

– Checklists to use with your own return.

– Today’s PowerPoint presentation.

– Archived recording of today’s webcast.

– Tips on choosing the right financial advisor.


http://www.360financialliteracy.org/

http://www.findacpapfs.org/

http://www.aicpa.org/pfp

Questions?

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taxes: the start of your financial plan · 4/27/2018 · taxes: the start of your financial plan...

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