Tips for Tax Time Savings

Tax-time is a stressful time, especially if you haven’t prepared for it properly!   

The best way to reduce the stress is to have a plan in place! Each year, after you file your taxes, take a look at what you were pleased with and what you wish was different. Then, you can come up with a plan to help improve the following years’s tax returns.

Below, we’ve offered up some simple strategies that can help you to have a better time on your taxes next year, but if you need more specific advice, a qualified CPA is always the best person to turn to.

Tip #1: Think Long-Term

When you file taxes, it’s tempting to just go with whatever is going to get you the most money the soonest. However, you really need to consider how your tax decisions today are going to affect you in the future; in other words, think long-term!

For example, when it comes to passive index investing, people often put off selling their best portfolio pieces because they don’t want to pay the capital gains. More often than not, though, capital gains aside, selling would still be the wisest and most profitable decision over time. And that phrase- “over time”- is key; no matter what kind of decision you’re trying to make, choose the option that is going to pay off for the longest amount of time, even if it costs you money upfront or gives you a smaller-than-you’d-like amount upfront.

Tip #2: Change Custodians (if necessary)

If your current custodian isn’t working for you, or, if another custodian is offering you better service and a nice bonus to change custodians, then by all means, do it! These days, you can typically switch everything over online, meaning no hurt feelings. Plus, no capital gains taxes are involved, so it’s really a win-win, providing you research your new custodian carefully and make sure it’s a good, long-term choice.

Tip #3: Get Help from a Pro

Finally, recognize that no matter how much you know about taxes and tax law, a professional is going to know more.

As mentioned, a financial advisor can be a wonderful asset to you. Even if you don’t want to work with an advisor on a regular basis, it’s still a good idea to have one go over last year’s tax returns and point out areas in which you can do better. It can make a world of difference!