SGH Wealth Management: What I'm Reading

5 Reasons Why Your Tax Return may be telling you to Change Advisors

SGH Wealth Management

Reviewing your tax return with your Financial Advisor is one of the most efficient ways for them to be able to add value to your situation and the great part is that most can be found in just your Form 1040. Here are 5 Reasons Why Your Tax Return may be Telling you to Change Advisors:

  1. Interest & Dividends: Be aware of the amount of interest you are receiving on your investments and whether those are Tax-Exempt vs Taxable. If you have a large amount of taxable interest and not much in Tax-Exempt, then it might be worthwhile to learn more about double tax-exempt Municipal Bonds.
  2. Capital Gains Tax Rate: If you are paying the top capital gains rate there may be ways for your investments to help fight the tax battle for you through: Tax Loss Harvesting, Loss Carryforwards, & Concentrated Stock Strategies (ESOPs/RSUs).
  3. Medicare Premiums: Your taxable income may be causing your Medicare benefits to have an additional cost of up to +$250/mo per person. There may be adjustments in your investment strategy that could reduce or cut out these extra premiums all together.
  4. 1099 Income: Retirement savings plans (i.e. SIMPLE IRAs, SEP IRAs, profit-sharing plans, Solo 401(k)s, and defined benefit plans) can be useful when receiving income as a contract worker, allowing for up to a 25% tax-deductible contribution along with tax-deferred growth.
  5. Employee Stock Benefits: For nonqualified stock options, exercise strategies can help the client plan for the recognition of income in more ideal tax years and manage alternative minimum tax concerns when the client exercises incentive stock options.

Have you reviewed your Form 1040 with your Financial Advisor?