By Ryan M. Blackburn, CFP ®, Managing Director, & Ashley C. Martin, CFP ®, MBA, Associate Director, Matter Family Office
When people think of taxes, they often cringe at the crunch leading up to April 15th. But for families with complex financial worlds, tax planning isn’t limited to the first quarter. It’s a year-round affair that requires families, wealth advisors, and CPAs to live in two worlds—prior year and current—and as summer draws to a close, the heat turns up on taxes.
At Matter, we think of tax planning as an integral part of managing wealth opportunities and complexities. We support Matter families by providing high-level guidance that aligns their tax strategies with their overarching wealth goals and values, and collaborating with their CPAs throughout the year to help ensure the tax process runs smoothly.
As we transition from summer to fall, we’re coordinating with Matter families’ CPAs to finalize prior year returns for the October 15th extended deadline, while contemplating tax requirements and options remaining this year. It’s a great time to get on the same page, confirm that tax preparers have everything they need to complete last year’s filing, and make sure there are no unpleasant tax surprises on the horizon for this year.
Leading up to these CPA meetings, we work with Matter families to be sure we know the answers to some key tax questions:
- Has the family acquired any assets this year, such as a new home or investment?
- Are there other unique tax events we should consider?
- Do family members expect their taxable income for the current year to be different than last year? Different than what’s expected for the upcoming year?
- Are there additional retirement plan contributions available to family members, given expected taxable income levels?
- If family members are over age 70.5, have required minimum distributions (RMDs) been completed or do they have plans to take these withdrawals? (Remember, there are significant tax penalties if RMDs do not occur prior to year-end!)
- Is the family considering making any charitable gifts this year? Have we determined which assets might be best to give, and what needs to happen prior to year end?
- Does the family plan to make any annual exclusion gifts or other estate planning gifts prior to year-end?
If you and your family know the answers to these questions, you’re ahead of the curve! If not, we recommend sitting down with your wealth advisor or CPA soon to make sure your taxes are on track as prior- and current-year deadlines approach.