Navigate Tax Season: First-Gen Strategies


Jenny Selvaggio

Wealth Advisor

In order to navigate the tax season effectively, think about what has changed in the past year, as well as what you want to change in the future. Engage a professional, stay informed, stay organized, and stay open to new possibilities.

If you find yourself on a new path, such as reaching new levels of income (and taxes) than you’ve previously experienced or running your own business, it can be easy to miss signs that it's time for a new strategy.

A wealth advisor who collaborates with your tax professional to integrate cash flow, investment, tax, and estate planning can help highlight new strategies to consider and translate popular topics through the lens of your unique situation. Their expertise can ensure that you take advantage of all available opportunities and that important deadlines are not missed.

I love helping my clients translate recent changes in their lives into maximizing a new opportunity set.

Tax planning is a key element in the wealth-building process. Many call it ‘addition by subtraction.’ By strategically managing tax liabilities, individuals and families can retain more of their wealth, working towards long-term financial goals.

Let’s explore today’s tax landscape and key strategies for those embarking on the journey of creating generational wealth.

Tax Landscape for First-Gen Wealth Builders

Tax laws are complex and often change over time, and staying abreast of these changes is a challenge. Wealth builders need to adapt their tax planning strategies to align with the current legal landscape. Establish a strong foundation of financial concepts and partner with a trusted tax professional to help you navigate the complexity. The details will change, but the concepts remain constant.

Many first-generation wealth builders today face the following additional tax challenges:

Increased job mobility means more change and complexity. Don’t forget to adjust your tax plan with each change.

Venturing into entrepreneurship means understanding business tax planning becomes essential to maximizing available tax incentives.

Startups have played a significant role in job creation, innovation, and economic growth. They also introduce new and different tax challenges related to equity compensation agreements.

The tax landscape is not limited to income taxes. If you're focused on creating a long-lasting legacy for your descendants, incorporating Estate Planning into tax strategies is critical. Potential exposure to Estate and wealth transfer taxes should be monitored and incorporated into any wealth strategy.

Practical Tax-Saving Guidance

• Saving on taxes does not always mean today. Don’t get so focused on your current income and taxes that you don’t think through what your taxes may look like down the road: after retirement, after the death of a spouse, after the sale of a business, after passing on to your children.

• Stay organized to easily identify key deductions and credits.

      o Maximize business expense deductions.

      o Embrace tax credits. Review any expenses you have related to children or education. Tax planning can be integrated into education funding strategies. Consider tax-advantaged education savings accounts, scholarships, and education-related tax credits.

      o Leverage tax-advantaged retirement accounts such as 401(k)s, 403(b)s, 457s, or IRAs in higher brackets.

• Maximize lifetime tax savings through strategic decisions.

      o Diversify your wealth from a tax perspective to create tax-efficient withdrawal strategies in the future.

      o Audit your tax withholding after major life events.

      o Consider tax-efficient giving strategies.

      o Identify opportunities for tax loss harvesting.

      o Review optimal business structure.

      o Review tax implications of selling investment or business assets.

Resources and Conclusion

Forgot to do something? There may still be time! Did you know that some tax strategies do not follow a calendar year deadline? For example, although the deadline for a Roth conversion is typically at the end of a calendar year, Roth IRA contribution deadlines for the previous tax year are typically the tax filing deadline (usually April 15th of the following year), depending on your circumstances.

Tax planning is not a one-size-fits-all endeavor, and the strategies you employ should be tailored to your specific financial circumstances and goals. Today’s challenges may be different, but the most efficient way to navigate tax planning has not changed.

• Engage a partner to be proactive.

• Stay informed and organized.

• Consider the timing of income and expenses.

Coyle does not offer or provide legal or tax advice. Please consult your attorney and/or tax advisor for such services.

Jenny Selvaggio

Wealth Advisor

Jenny Selvaggio is a Wealth Advisor at Coyle Financial. Jenny's experience, individualized guidance, and network of highly respected professionals provide her clients with enhanced clarity and purpose for their wealth. She is passionate about assisting her clients and their families in planning for their next chapter in life.

All information is from sources deemed reliable, but no warranty is made to its accuracy or completeness. This material is being provided for informational or educational purposes only, and does not take into account the investment objectives or financial situation of any client or prospective client. The information is not intended as investment advice, and is not a recommendation to buy, sell, or invest in any particular investment or market segment. Those seeking information regarding their particular investment needs should contact a financial professional. Coyle, our employees, or our clients, may or may not be invested in any individual securities or market segments discussed in this material. The opinions expressed were current as of the date of posting but are subject to change without notice due to market, political, or economic conditions. All investments involve risk, including loss of principal. Past performance is not a guarantee of future results.

Copyright © 2023 Coyle Financial Counsel. All rights reserved.

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