Originally published by Chattanooga Times Free Press
by Andy Muldoon, Senior Vice President
Oh those deadlines!
Just when you thought you knew all those tax return or extension deadlines, here they go changing them. Because of the Washington, D.C., Emancipation Day Holiday observed on Friday, federal returns are not due until Monday. Additionally, Tennessee’s Hall Income Tax return and Georgia’s Income Tax filing dates have also been moved to Monday. If you are like me, a few extra days always helps ensure an accurate return.
After Dec. 31, there are few opportunities to lower your tax bill. However, most tax professionals and financial planning advisers encourage you to consider contributing to either an IRA, a simplified Employer Pension (SEP) IRA, or a Health Savings Account (HSA) if you qualify for these types of deductions.
I have always thought these deadlines were a good “awakening” for individuals to review the impact of those returns on their wealth and assess how they could be doing a better job of minimizing their tax liabilities and working on their long-term financial plan. Unfortunately, a recent survey found only 29 percent of respondents said they had focused on the effect of taxes in their investment portfolios over the course of the year and only 40 percent reported that they had a written financial plan.
Typically, items like capital gains or losses on the sale of assets like stocks or bonds come as a big surprise after the tax year has ended. I frequently hear things like “oh, if I had just waited another week to sell that stock I would not have had such a large short term capital gain” or “do you think it would be better to consider interest income from bonds, which is exempt from the Tennessee Hall tax?” The list goes on and on.
The sad reality to these types of questions is that waiting until the new tax year to think about this is too late! Managing your wealth is a 365 day-per-year job, not one that occurs on April 15th (or the 18th this year.)
Ask yourself, “Do you have a deadline for reviewing your comprehensive financial plan? Do you meet regularly with your wealth advisor and other professionals to review your wealth road map?”
Recently, I met with a successful business man who had provided abundantly for his family and accumulated substantial wealth over his career. I realized the reason for his success was that he was very talented and ran his business thoroughly and thoughtfully. No stone was left unturned, and at the end of each year he worked through the complexities of both of his business and personal tax returns. Unfortunately, unlike his business and its long-term plan, his personal long-term plan was in need of help.
Less than half of investors believe tax planning and financial planning are the same activity.
“Tax season is a time of year when people have all their financial information top of mind, so it’s the ideal time to pay attention to broader financial goals and plot how you plan to get there,” according to Joe Vietri of Charles Schwab’s retail branch network.
So determine your deadline for reviewing your comprehensive financial plan and make sure you have a regularly scheduled meeting with your wealth advisor and other professionals to review your wealth road map. If you have not thought about it before, manage your wealth like you manage your business. Develop short-term and long-term plans, and work with all of your coaches.
Andy Muldoon is a senior vice president of The Trust Company in Chattanooga and may be reached at firstname.lastname@example.org or 423-308-6834.