How Do I Pay Less Taxes?

By Modern Wealth Management

February 13, 2019

Everyone in America who pays taxes feels like they have paid their fair share. And in some cases, far more than their fair share. So, how do you pay less taxes? This causes people to be very shortsighted when it comes to reducing your tax bill.

Why Most CPAs Can’t Help You Pay Less Taxes

Most CPAs are tasked with the difficult duty of finding ways to save you money on your current tax returns. The problem is, it’s too late! At this point, all of your taxable income and investment assets have made their money. As a result, it’s almost impossible for the CPA to affect the amount of taxes needing to be paid.

To indeed reduce taxes, your CPA needs to be projecting into the future, several years down the road. They need to understand every single part of your financial life. Not only what assets you have, but also what purchases you want to make in retirement.

BFG Tax Service’s JoAnn Huber, CPA, CFP®, and Partner at Modern Wealth Management, discusses filing your taxes early and what to do if you miss the filing deadline.

CPAs Working with Financial Planners

A good CPA working with a good financial planner can help you make sure that not only are you putting money into the right accounts while you’re working, but you also created the proper distribution strategy so that you pay fewer taxes throughout your retirement years. No one strategy is right for everyone, and there are no two cases that are the same. You will have different amounts of money, different amounts of income, and various spending goals for the future.

Additionally, what most taxpayers don’t realize is most CPAs will merely do tax compliance. Tax compliance is defined as making tax payments and producing and submitting information to the tax authorities on time and in the required formats. In other words, they would prepare it with only compliance and IRS guidelines in mind, and with no thought of future tax reduction strategies. Make sure you don’t get shortsighted and only focus on today, but instead, look to the future and understand that taxes will always be a fact of life. If you know this and plan for it, you will pay what you legally owe but not one dollar more.

Transparency is Important

It is imperative that your forward-looking tax plan is kept up-to-date through ongoing conversations between your financial advisor and your CPA. It is also vital that you give total transparency to these professionals so that they can do their job to the best of their ability. Appropriately done, proactive, forward-looking tax planning can have an enormous impact on the amount of taxes you pay over your lifetime.

If you have questions about your taxes and how it relates to your overall retirement plan, or need assistance in the preparation of your 2018 tax return (even if you aren’t a client of Modern Wealth Management!) call our office today at 913-393-1000 or schedule a complimentary consultation below to make your appointment.

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The views expressed represent the opinion of Modern Wealth Management an SEC Registered Investment Advisor. Information provided is for illustrative purposes only and does not constitute investment, tax, or legal advice. Modern Wealth Management does not accept any liability for the use of the information discussed. Consult with a qualified financial, legal, or tax professional prior to taking any action.