(Long Island, NY) “Structured financial planning will maximize tax strategies and result in higher income for businesses and families,” said Rick Cross, founder of Right Financial Advisor Inc. of Holbrook, NY. As Tax Freedom Day approaches investors can increase income with a few changes in their portfolios, he explained.
“Tax Freedom Day® is April 24, 2015 in New York and is the day when the nation as a whole has earned enough money to pay off its total tax bill for the year. Tax Freedom Day provides Americans with an easy way to gauge the overall tax take-a task that can otherwise be daunting due to the multiplicity of taxes at various levels of government and ‘hidden’ taxes and fees that are often buried in the cost of living,” according to Taxfoundation.org
Tax Freedom Day computed by dividing total tax collections by the nation’s income, as reported by the Bureau of Economic Analysis. Every dollar that is officially called income by the government is counted, and every payment that is officially considered a tax is counted. The resulting percentage is then converted into days of a 365-day calendar year. In 2015 this means that taxpayers worked the first 114 days of the year for the government before putting a penny in their own pockets. Cross says there is a way of increasing personal Tax Free Days and suggests several ways to put more money into your pocket:
- Most American’s do not fully fund their 401K plans which results in higher taxes which means their “TAX FREEDOM DAY” increases. Each of us has our “OWN TAX FREEDOM DAY” and which day that will be depends on part by the politicians, but also on the individual. For business owners, the right financial advisor will review and propose individual retirement and pension plans. A small business owner over the age of 50, could implement a defined benefit plan that would allow him to contribute a substantially amount more than a 401K whose limit for a worker over age 50 is $24,000 per year.
- Individuals who have either large amounts of interest income from CD’s or corporate bonds could swap some of those assets for either tax free bonds or defer the tax until later by using a tax deferred annuity.
- Higher income investors can deploy a tax harvesting strategy that monitors a stock and bond portfolio and sells assets at the end of the year at a loss to offset any capital gains. The trick is to avoid the IRS rule called “the wash sale rule” which means you cannot sell a stock, bond, mutual fund for a loss and then buy it back within 30 days.
- Use tax efficient ETF’s for a non-retirement portfolio that doesn’t pay dividends and capital gains which are taxable in the year received.
- Finally, some life insurance products have features that can be quite tax efficient. Whether you use some of these actionable ideas or the “All of the above method”, finding the right financial advisor to properly explain the features and benefits and the downside risks to investors and showing the taxpayer’s how to properly integrate these concepts is vital. All in all, if you plan properly, you can accelerate your own personal tax freedom day and that translate into more money for you and your family.
For additional information call 800-391-4970 or visit www.RightFinancialAdvisor.com. Office: 4250 Veterans Memorial Highway, Suite 420E, Holbrook, New York, 11741.