Tax Planning—We’re Just Getting Started

Tax Season—We’re Just Getting Started

Woman getting started on tax season.

Tax Season Is Over—Tax Planning Begins

Tuesday marked the deadline to file your tax returns for 2022, unless your state granted an extension. But that doesn’t mean we’re not thinking about your tax strategy—in many ways, tax planning season is just kicking off for us. Ultimately, we’re here to help you tackle tax issues all year round in the context of your broader financial plan. Feel free to treat this as a mini checklist to use the next time we meet to discuss your financial plan.

Charitable planning. If you have goals for giving, we can walk you through which types of charitable donations provide the greatest overall tax efficiency. For example:

  • Let’s discuss how to make qualified charitable distributions (QCDs) from your IRA—they are excluded from your taxable income and you don’t need to itemize them when you file your tax return.
  • If you are giving stock, long-term appreciated equities are the most tax efficient—the more appreciated the better.  
  • From a tax-efficiency perspective, keep in mind that giving cash is the most “expensive” way you can donate or pass along wealth.

Family gifting. Giving money to your loved ones can be an excellent way to set them up for financial success. But remember, the IRS puts a ceiling on how much you can gift untaxed. (In 2023, the gift tax exclusion is $17,000 per person per year for individuals or $34,000 if you file jointly with a spouse.) But we can help you gift above the limit by earmarking funds for the education or medical expenses of family members.

Roth conversions. If you anticipate a low-income year due to early retirement or some other reason, it may make sense to take the opportunity to convert. This strategy can be especially effective if you’ve elected to defer Social Security benefits to age 70—dropping your tax rate even further. The longer you have before you need the money, the more sense it makes to convert assets to a Roth. Once you convert, qualified withdrawals will never be taxed. Leaving those assets untouched for as long as possible allows them to grow tax-free over time. This will squeeze the most juice out of the conversion.

There’s a lot more to cover—but that’s enough tax talk for today. Please reach out so we can continue the conversation to be sure you’re in excellent financial shape this time next year.

Is Social Security Secure? 

As with tax strategy, we’ve also got you covered on Social Security concerns.

You may have seen the news that the Social Security fund is projected to be depleted one year earlier than expected…again. It’s become an annual tradition to hear that Social Security is in danger of default. 

That said, we understand the concern and we’ve certainly received questions from clients: Will my Social Security benefit be reduced? Should I file early to make sure I receive benefits? In fact, a survey from Transamerica found that 70% of workers lose sleep over Social Security’s solvency, or lack thereof.  

Our quick response? Social Security shouldn’t keep you up at night.  

The first thing to know is that Congress has a simple means to solve this problem, but it’s a political hot potato. Why? To get Social Security back on track, Congress needs to make the unpopular decision to raise taxes. (If you’re seeking reelection, it’s just easier to kick the can down the road to the next person.)

Congress can also look at solutions such as raising the Social Security tax rate or increasing the wage base on income subject to Social Security tax. Or it may eventually permit the option to defer benefits beyond age 70. Ultimately, a small tweak to each of these things would likely create solvency without resulting in cuts to benefits.  

For now, though, theoretical solutions may not make you feel any better. Fortunately, we have something that can help. We can use software to run a what-if scenario to determine what your long-term financial plan would look like if Social Security benefits were reduced—and then we can work together to plan accordingly. Let us know if you’re concerned.

Now get some sleep!

Market & Economy Snapshot

After many months with interest rates and inflation driving sentiment on Wall Street, this week finds corporate earnings in the spotlight. Just 9% of the S&P 500’s companies have reported as of Wednesday afternoon, yet 84% of those have exceeded earnings-per-share estimates. That’s an assuring indicator, even if it’s too early to discern a meaningful trend. Here are a few of the sectors we’re watching as we position your portfolios. 

Given the collapse of Silicon Valley Bank and the associated fallout, our analysts are monitoring quarterly reporting from the banking sector. Based on their earnings, big institutions including J.P. Morgan, Citibank and Bank of America were largely unfazed by SVB’s downfall, while positive reports from regional banks Western Alliance Bancorp and Metropolitan Bank gave reassurance that there’s still safe harbor for depositors and investors beyond global banking titans.

We’re also keeping an eye on the transportation sector, a part of the economy that can be a leading indicator of recession: Delta Air Lines posted a loss for the first quarter, warning that its travelers’ behavior has become less predictable. Meanwhile, trucking and logistics giant J.B. Hunt reported a “challenging freight environment” that’s still grappling with the effects of inflation.

Looking ahead, earnings will remain a focal point leading up to the Federal Reserve’s policy meeting beginning on May 2, when we will see where interest rates are headed next and hear central bankers’ take on the health of the economy.

Remember to visit for our timely and ongoing wealth management commentary.

About Adviser

Adviser is a full-service wealth management firm, offering investment managementfinancial and tax planningmanaged individual bond portfolios, and 401(k) advisory services. We’ve been helping individuals, trusts, institutions and foundations since 1994. Adviser Investments and its subsidiaries have over 5,000 clients across the country and over $8 billion in assets under management. Our portfolios encompass actively managed funds, ETFs, socially responsible investments and tactical asset allocation strategies, and we’re experts on Fidelity and Vanguard mutual funds. We take pride in being The Adviser You Can Talk To. To see a full list of our awards and recognitions, click here, and for more information, please visit or call 800-492-6868.

Please note: This update was prepared on Thursday, April 20, 2023 prior to the market’s close.

This material is distributed for informational purposes only. The investment ideas and opinions contained herein—including but not limited to the Your Question Answered section—should not be viewed as recommendations or personal investment advice or considered an offer to buy or sell specific securities. Data and statistics contained in this report are obtained from what we believe to be reliable sources; however, their accuracy, completeness or reliability cannot be guaranteed.

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