The Value of Tax Planning

by Kevin Rigg, Director of Financial Life Planning, Lead Advisor, CFP®, CPA

Taxes are an inevitable part of life as much as we might like to ignore them. As such, it is important to stay current on tax law changes and plan proactively, to take advantage of tax-saving opportunities. At SoundView, we have a well-established tax planning process in place to help our clients manage this part of their financial life. We start by establishing the following objectives for effective tax planning: 

  • Be proactive and shape transactions in advance 

  • Take the long view and “smooth” anticipated taxable income where possible 

  • Plan based on the tax law we have, recognizing it will change over time 

  • Prioritize wealth-maximization, not tax-minimization 

In order to accomplish these objectives and provide value in the area of tax planning, we developed a comprehensive, annual process consisting of the following steps:  

  1. Assist with tax preparation – While we do not prepare tax returns, we work closely with our clients and their tax preparers to ensure they have the information and documentation needed to file complete and timely returns each year.  

  2. Review prior-year tax return – We request copies of filed tax returns each year and then review and summarize those returns to ensure accuracy based on our knowledge of each client’s financial situation.  

  3. Project future taxes – Based on our understanding of each client’s cash flow situation and portfolio activity, we do our best to reasonably estimate income and tax liability for the upcoming tax year(s).  

  4. Identify planning opportunities – Taking into account changes to tax law and each client’s personal situation, we consider and recommend various strategies with the goal of minimizing taxes and increasing wealth over time. 

For current clients, we have been collecting your 2022 tax returns and will begin our review process shortly, including putting together 2023 (and future year) projections. In the coming months, we will send you a summary report and planning recommendations and you can expect further discussion at your next scheduled meeting. Please let us know if you expect significant changes to your financial situation that will impact your taxes and we will be sure to incorporate those changes into our analysis and recommendations.