Tax Planning Strategies for Managing Income Surprises

Tax season can often bring surprises, but with the right planning, those surprises can turn into opportunities. Mary Baldwin, a Certified Financial Planner at Buckingham Strategic Wealth in Indian Harbour Beach, offers some valuable advice for those who may have had an unfortunate surprise when doing their taxes last year.

One key strategy Baldwin suggests is tax planning for “no/low income” years, which can be just as important as planning for high income years. She highlights the importance of balancing retirement income by utilizing pre-tax withdrawals, tax-free withdrawals, and investment account sales that qualify for discounted long-term capital gains rates.

For those who experienced a big tax year and are looking to offset their tax liability, Baldwin recommends considering charitable donations or contributing to a college savings plan. She also mentions the benefits of utilizing Health Savings Accounts (HSAs) for tax advantages and exploring tax-loss harvesting opportunities during market downturns.

Entrepreneurs and small business owners can also benefit from tax planning strategies such as using pre-tax funds for insurance expenses and retirement plans like SEP-IRAs or Solo 401(k)s.

Overall, Baldwin emphasizes the importance of reviewing your estimated income, standard deduction, and annual withdrawal needs to make conscious decisions for the upcoming tax year. By taking advantage of the various opportunities available and consulting with a qualified financial professional, individuals can avoid any surprises come tax season.

For more information and to contact Mary Baldwin, you can reach her at 321-428-4555 or [email protected]. Remember, it’s never too early to start planning for your financial future.