Finally finished with your tax returns? Taking a big sigh of relief and putting away your information until next year?
But wait – now is also a good time to review your tax situation and do some planning for 2012 and 2013. According to Jim Winter of Mountaineer Financial Planning of St. Albans, “proper tax planning can make a significant difference in meeting your financial goals in life. Tax planning is not just for the rich – different strategies can be considered at all income levels and at all ages and can make a real difference in moving towards financial independence.”
While income tax planning shouldn’t drive all of your decisions, just a few of the things that you may wish to consider include:
- Are you taking advantage of your 401(k) or other retirement savings plans at work?
- Are you taking advantage of other employee benefit programs at work?
- Are you taking advantage of self-employed retirement plans and other deductions?
- Did you consider IRA or ROTH IRA contributions, or ROTH conversions?
- Are you under or over withholding your payroll tax deductions?
- Did you consider how social security and retirement income impacts your tax liability?
- What is your marginal tax bracket and its impact to your income and deductions?
Because of our complicated tax code, the list can go on and on. It is also important to note that without action by Congress we will see major tax increases in 2013, including increases in ordinary income tax rates, capital gains tax rates, and estate taxes. While tax issues are unlikely to be resolved until after the election this fall, today’s historically low tax rates may also be an opportunity to be considered in your strategy.
The completion of your tax returns is also a good time to reflect on your overall financial situation and determine if you are on the right track. It is important to at least annually take a look at your investments, your level of annual savings, and your living expenses to see if changes need to be made to meet your goals. Moving towards financial independence is an important step in having the resources needed to accomplish our true goals in life, whether your goals are retirement, education, travel, or having the time and resources to help others.
An individualized financial plan can help you to determine if your savings, spending and investing habits put you on track to achieve your goals. It can also establish an action plan of specific financial, tax, and investment strategies to achieve your goals.
If you need assistance in developing a financial plan tailored to your risk tolerance and personal goals, Mr. Winter advises that you “get objective financial advice from an independent Fee-Only financial planner who is a fiduciary working with undivided loyalty to the client.”
About Mountaineer Financial Planning LLC
Mountaineer Financial Planning LLC, an hourly Fee-Only financial planning firm based in Saint Albans, WV, was founded by James A. Winter, CFP®, CPA/PFS. Winter is a Certified financial plannerTM professional and a Certified Public Accountant (CPA) and one of only fifteen Personal Financial Specialist (PFS) credential holders based in the state of West Virginia. Jim has also been granted membership as one of only three West Virginian practitioners in the National Association of Personal Financial Advisors. Jim is the only WV member of The Garrett Planning Network, an international affiliation of Fee-Only financial planners. For more information on the objective and independent financial services provided, visit www.MountaineerFinancialPlanning.com.
