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Active tax planning

July 2nd, 2007 by Kenric

Many people only think of their accountant only in January through March.  The reality is that by the time you take a look at your taxes after the new year, there is really not much that you can do to save on taxes.  Tax planning should be a ritual that you do throughout the year.  I speak with my accountant about once every 6 months.  I get charged $50/hr to talk to him and we discuss what I’ve been doing in the past 6 months and if I’ve had any significant financial changes.  Then he works up a preliminary tax return for the year.  We go over it and see where I can save money.  If we meet in June, I still have 6 months to implement any tax strategies.

These meetings have saved me countless amounts of money in the past years.  A simple $200 meeting probably saved me over $34,000.  A friend of mine is currently implementing a strategy that will save him $40,000 this year.  Without meeting an accountant he would have never realized how his windfall drastically affected his tax bracket and taxes.  If this meeting had occurred in 2008 instead of last month, his tax bill would be $40,000 higher.

Any investors should have regular meetings with their accountants during the year.  You must also have a tax plan to go along with your investing plans.

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