By SJS Investment Services Chief Investment Officer Tom Kelly, CFA.
“Death, taxes and childbirth! There's never any convenient time for any of them.” ― Margaret Mitchell, Gone with the Wind.[1]
While there never seems to be a good time to talk about taxes, the topic has been unavoidable this year. With a $large infrastructure plan in the works, the House Ways and Means Committee recently introduced a draft bill advancing many tax proposals, such as raising the top long-term capital gains tax rate from 20% to 25%, a potential net investment income tax of 3.8%, and increasing the top individual federal income tax rate from 37% to 39.6%.[2][3] While none of these are set in stone, the right time to talk about taxes is now!
In collaboration with your SJS Advisor and other trusted professionals, here are some tax smart things to consider before year-end:
Tax-Deferred Contributions
Contribute the maximum amounts to tax-deferred retirement accounts - including 401(k), Individual Retirement Account (IRA), and Health Savings Account (HSA) - to reduce your taxable income.
Roth Conversions
With your SJS Advisor and trusted tax professionals, identify if there are opportunities to accelerate income into 2021 through a Roth Conversion.
Charitable Donations
Gifting of highly appreciated securities held for more than one year, either directly to a qualified charity or to a charitable fund. You could reduce taxable income and avoid realizing capital gains on those donated securities.
Estate Planning
With your SJS Advisor and trusted estate professionals, review your estate and financial plans to understand how you are positioned to achieve your financial and legacy goals
While we may have just added a few things to your to-do list, know that SJS has been reviewing opportunities on your behalf throughout the year. Using our MarketPlus Investing principles and our disciplined approach to long-term investing, we strive to manage tax-efficient portfolios by utilizing asset location (putting tax-disadvantaged investments in tax-advantaged accounts), tax-efficient investments (using mutual funds and ETFs with low capital gains distributions), and tax loss harvesting (realizing losses in order to offset future realized capital gains). We are always looking for ways to decrease your April 15th bill. Wherever taxes go in the future, we will continue to be here for YOU. All the time. Every time. At whatever time is convenient for you.
Important Disclosure Information & Sources:
[1] “Margaret Mitchell > Quotes > Quotable Quote“. Goodreads, goodreads.com.
[2] “What’s in Democrats’ $3.5 Trillion Budget Plan—and How They Plan to Pay for It“. Wall Street Journal Roundup, 09-Aug-2021, wsj.com.
[3] “How House Democrats Plan to Raise $2.9 Trillion for a Safety Net“. Emily Cochrane & Alan Rappeport, 13-Sep-2021, nytimes.com.
Advisory services are provided by SJS Investment Services, a registered investment advisor (RIA) with the SEC. Registration does not imply a certain level of skill or training. SJS Investment Services does not provide legal or tax advice. Please consult your legal or tax professionals for specific advice. This material has been prepared for informational purposes only.
Hyperlinks to third-party information are provided as a convenience and we disclaim any responsibility for information, services or products found on websites or other information linked hereto.
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