Date: March 2, 2023

Are You Ready for Tax Season?

Are you prepared for the upcoming tax season? With deductions, changes in regulations, inflation, and sometimes-uncertain markets, it’s important to take a moment and evaluate your financial position before filing. 

Tax season can be an especially stressful time for affluent families and individuals: The filing process often involves numerous documents, scaling hungrily with the size of your income. However, with enough forethought and planning, it doesn’t have to be painful.

Whether you’ve yet to begin collecting your tax records or you’re almost done (but want some tips on how to make sure everything is taken care of in time), this article is meant to help you avoid overpayment.

 This blog discusses the following:

  • April will be here in a blink. Are you ready?
  • Tax loss harvesting might reduce your capital gains. 
  • If your taxes are done, let’s start planning next year. 

April Will Be Here in a Blink. Are You Ready?

I know: To some of us, it seems like December was last week—and it was late summer the week before. Nevertheless, April isn’t slowing down on its way to us. Like it or not, it’s hurtling this way like a freight train. 

One minute it’s February… and the next, H&R Bloch commercials are all over TV shows and radio. That’s why it’s so important to make sure that your finances are in order now. If you’re a high-net-worth investor, you may understand the importance of staying on top of your finances and planning ahead. Nevertheless, if you haven’t already, it’s a good idea to start reviewing your accounts (and do it regularly). 

There are multiple reasons why, but the biggest may be that it helps keep you on top of any changes in market conditions or tax laws that affect your investments. So, make sure to check all of your accounts; your stocks, bonds, mutual funds, real estate holdings, and any other investments. 

Additionally, check on any retirement savings accounts as well. Keeping at least a ballpark estimate of your savings and assets in mind can help you stay positioned to take advantage of strategic tax reduction opportunities. It also allows you to make better-informed decisions. 

However, there is a little bit of a caveat: You need to know your overall financial objectives, as well. Having specific goals is crucial for managing your money successfully. It’s pretty hard to determine the best steps to take with your money when you don’t.

Whether you’re out to expand your business or retire to a French Polynesian island, setting financial goals also helps keep you focused and motivated. So, think about what kind of returns you want to achieve over the next few months, and then set realistic goals to help yourself reach them. 

Next, consider setting long-term goals, such as establishing another branch or location for your company. These longer-planned objectives can be broken down into sub-objectives to serve as milestones throughout the year. If you’ve ever heard the expression “don’t sweat the small stuff,” this is doing the opposite; celebrating modest steps in order to enjoy the journey to your larger goals.

When you review your finances, take a step back and look at the big picture: Has your overall financial situation changed since last year? Do you need to adjust any investments or strategies? It’s well worth taking a little time to consider things comprehensively.

Are there any major expenses coming up that could be strategized for asset protection, wealth growth, or tax mitigation? Taking a holistic view of your finances can help ensure that all parts are working together in harmony towards a common goal. By doing this now, you can identify potential issues early enough to take steps to address them before they become bigger problems. 


Have You Tailored Your Retirement Plan for Today’s Economic Conditions? If Not, We Can.


Tax Loss Harvesting Might Reduce Your Capital Gains.

tax loss harvesting investfortomorrow.comUnfortunately, achieving financial success is sometimes rewarded with heavy taxation. Capital gains, for example, mean that your taxes bite deeper if an asset you sell has gained value since you originally bought it. Thankfully, however, tax loss harvesting is a strategy that can be useful for reducing short- and long-term capital gains taxes. 

This process involves selling investments that have lost value in order to deliberately take a loss. The reason why is that you can use losses to offset the taxes you owe on investments that have gained value over time. As a result, you save money by reducing the tax cost assessed for the sale.

Tax loss harvesting begins with identifying any current losses. To do this, you review your portfolio, seeking securities that have declined in value since you purchased them. Once these potential losses are identified, the next step is to decide whether or not it makes sense to sell them. 

In other words, you consider their expected future returns, current market conditions, and what kind of (additional) tax implications their sale could involve. Once you’re sure that you want to sell a security, the transaction generates a capital loss. That, in turn, can then be used to offset financial gains elsewhere, reducing your taxable income.

Tax loss harvesting can also provide you with an opportunity for diversification within your portfolio. At the same time, it can potentially increase returns by reducing your overall tax burden. Tax loss harvesting can also help you free up cash flow by reducing your overall taxable income each year. 

If Your Taxes Are Done, Let’s Start Planning Next Year.

If you have already filed your income taxes for this year, it’s time to start planning ahead. 

Before you roll your eyes, hear me out: Of course, we try to save you money on any given year’s tax return, but those results are often pocket change in comparison to the amount of tax savings it’s possible to net by tactically reducing your liability, long-term. 

To put it another way, taking a proactive, strategized approach to your taxes over the years or longer can make a profound difference in your financial future. The U.S. tax code is infamous for its length, and it’s not getting any shorter, either. 

In fact, tax laws are constantly changing, so staying informed and up-to-date with current legislation is never a bad idea. The more familiar you are with the lay of the land, the more confident you can be when filing your taxes next year. 

Having all of your financial records organized before April 15th of 2024 can make filing your taxes much easier as the dreaded day arrives. Keeping digital copies of receipts, invoices, and other financial documents will also make it simpler to access your records, as needed, for proof. 

Planning your taxes out ahead of time can also ensure that all potential deductions have been taken into account when you file. Similarly, it allows you to save more money than you could by waiting until the last minute. Take it from an Accredited Investment Fiduciary® (AIF®): The sooner we start, the happier you’re likely to be next April.

Contact us or schedule a free consultation to learn more about high-net-worth retirement planning in Connecticut, estate planning, and more. We’re ready to help you retire with confidence in Woodbridge.

plan a bulletproof retirement


Paul Schatz, President, Heritage Capital