News & Information

Home

Bay Financial Newsletter

How to Use Your Income Tax Return
to Spotlight Financial Security Needs

If you are like most Americans, you are about to go through the trauma of preparing and filing your IRS Form 1040, the federal income tax return.

The odds are good you will soon be asking yourself:

• What can I do so I will not have to pay so much tax – next year?
• Have I optimized my retirement planning possibilities?
• Do I (does my family) have adequate financial security if I die or become disabled – or when I retire – or when the time comes for my children to go to college or professional school?

Pablo Picasso said, “There’s only one way to see things – until someone shows you how to look at them – through different eyes.”

You’ll find a wealth of tax reduction opportunities – by using your tax return – not as history – but as a way to change your future – by looking at it through different eyes.

Here are just a few questions of the many questions you may want to ask yourself as you revisit your last year’s 1040 or prepare your new one:

1) What is my combined federal and state tax bracket?

2) What can I do to reduce income taxes?

3) Should more of my assets be placed into tax exempt or tax deferred investments or in a deferred annuity?

4) Is too much income coming from one source (Should I diversify)?

5) Am I liability prone? Should some of my assets be re-titled or repositioned to provide greater exemption or protection from creditors?

6) Have I considered FLPs (Family Limited Partnerships), LLCs, or other tools or techniques such as making annual gifts of income producing property that will help shift income (and income taxes) to lower bracket family members?

7) Have I considered the power of regular or Roth IRAs for my children or grandchildren who have earned income – and combining this with gifts of property to reduce my taxable estate?

There are, of course, many other estate and financial security ideas that you can discover by going through your just finished IRS 1040.

As always, please feel free to call to discuss these or any other areas of interest or concern. We’re here for you.