Taxation
Experts in taxes, Reserve Wealth helps you understand the complexities of the tax system, which means your lack of knowledge of the tax system does not stand in your way of complying with tax rules. Having someone to take care of your tax affairs is sure to give you a great amount of peace of mind and you have more time to focus on the development of your business.
The Process And Solution
Upon reviewing the most current tax return of the couple, we could find out how much taxable income was being generated from investments.
- We noticed that interest was being taxed as ordinary income. We suggested them to invest in municipal bonds so that no federal tax will be incurred on interest.
- We observed that, as the capital gains were derived on an annual basis from the mutual fund distribution, it led to additional taxes. Hence we suggested tax-efficient investment strategies for minimizing taxes from capital gain distributions on an ongoing basis.
Next, we reviewed the company benefits for the husband. He was an employee of a large pharmaceutical company, which paid bonus and short and long-term incentive-based compensation in addition to his salary. We made sure that he was maximizing his 401k plan contributions, including its catch-up provisions.
After reviewing the stock options, restricted stock awards, deferred compensation and performance awards, and taking into consideration the anticipated retirement date of the husband, we helped him to coordinate the timing to sell company incentive stock awards, with overall income and tax objectives. A long term plan was set up that optimized the value from the company incentives, even while it minimized taxes.
We further pointed out that charitable gifts of appreciated stock could help reduce company stock exposure and may provide a tax-advantaged charitable deduction. They also were sure to deduct investment advisory, financial planning and tax preparation fees.
Thus we could successfully minimize the tax liability of the clients and we helped them to devise a more tax-efficient investment strategy for maximizing the after-tax value from the client’s company benefits.