Here at the end of tax season, the CPAs are headed for the beach and the rest of us are left to lick our wounds from having to pay the taxman so much. You may be feeling the weight of:
“I coulda, shoulda, woulda asked more questions, planned differently, had an additional conversation with my financial advisor or CPA."
Navigating Complex Tax Liability
Most of our current clients are from within the pharmaceutical industry and have to navigate additional complexity. These clients are dealing with more complex compensation structures. This includes things like variable compensation when it comes to long-term incentives or the exercise of stock options.
Other times, it may come from dividends on long-term incentives where the money shows up with no tax withholding. Without guidance, many people are left with a lot of regrets or April surprises this time of year due to the tax strategy not being quite right.
Generally, this is due to all of that income coming from many different sources, whether that is base salary, bonuses, long-term incentives in the form of stock options, or other forms of compensation that are variable in nature. It can feel like these make the tax liability almost unknowable until the CPA comes in and delivers the bad news. If that’s you, there is usually a little bit of emotional gloom over our heads while we are doing tax filing or putting things on our extension.
Learning and Adapting Your Tax Strategy
So what now? There is still hope that you should be holding onto. I want to encourage you as you may be licking some wounds this tax season. The opportunity to begin planning for 2023 tax liability starts now. There are many questions to be asked and many conversations to be had in order to manage your tax liability proactively. We can’t fix last year, but we can learn from it and work on this year.
Options to Manage Your Tax Liability Proactively
- Roth IRA conversions
- Maximize your contributions to your retirement plan
- Using catch-up contributions to your retirement plan
- Executive deferred comp plans
- Handling or using donor-advised funds to bunch charitable contributions into an individual year
- Maximizing tax-loss harvesting
These are strategies that are beneficial to consider. We want to make sure that you’re having the right conversations to leverage every tool at your disposal. Here at Vizionary Wealth Management, we want to help you manage your tax liability as effectively as possible. Working alongside your CPA, we want to take a collaborative approach to manage your tax bracket down and minimize surprises next tax season.