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Minimize your tax bill by making the most of your tax planning opportunities.

For high earners, taxes likely make up the single biggest expense incurred over the long haul — and a too-high tax burden can spell disaster. With more money going to Uncle Sam, you have less to spend on things of your own choosing, including vacations, your kids’ private school and college education expenses, and your retirement.

So instead of scrambling to find write-offs and deductions at tax time, try taking a proactive approach to lower your tax bill and increase your income.

Tax planning involves the intelligent analysis and arrangement of your wealth in order to maximize tax breaks and minimize tax liabilities, within the confines of the law.

Proactive tax planning is an essential component of your comprehensive financial plan. With an effective tax planning strategy, you can better enjoy the present knowing that your future is protected.

When putting together your tax planning strategy, we’ll first assess your individual finances from top to bottom, including your:

  • Short- and long-term financial obligations
  • Family structure
  • Business structure
  • Investment portfolio
  • Expected future earned and unearned income
  • Pending asset purchases

Next, we’ll use our experience, knowledge, and expertise to cherry-pick a selection of tax strategies to ensure that you:

  • Take full advantage of beneficial tax-law provisions,
  • Uncover all tax deductions and tax credits, and
  • Take advantage of all tax breaks available under the Internal Revenue Code.
Two adults sit in a bright, cozy room suggesting a serious discussion or consultation tax planning services

Fingerprint Financial Planning™

At Prosperity, we’re committed to learning your Financial Fingerprint™ before making recommendations about products and services.


We’ll spend 30 minutes getting to know you—your situation, needs, and vision—then offer a strategic plan to reach your goals.

The Importance of a Tax Planning Strategy

There are many ways to do this:

  • Mistiming the sale of appreciated securities 
  • Withdrawing retirement funds too soon when hanging on for just a little longer would’ve saved you from a stiff penalty
  • Failing to arrange for significant tax exemptions

The list goes on and on.

The Prosperity Difference

The last thing you want is to create a bigger tax bill for yourself after failing to use the tax-smart alternative. As your Fiduciary Advisors, we’re here to make sure that you don’t have to learn this lesson the hard way!

That’s why it’s important to consider taxes before pulling the trigger on significant transactions. And considering that federal income tax laws are becoming ever-more complicated, a solid tax plan is more advantageous than ever before.

With a Prosperity Advisor keeping an eye on your tax obligations and opportunities throughout the year, you can stay compliant with the tax code while shielding your finances from unnecessary investment, income, business, life event, and estate taxes down the road.

We’ll work with your CPA and attorneys to forward your important information on your behalf, keep you up-to-date with tax developments, and help you implement tax-minimizing strategies.

The Prosperity Difference

13 Smart Tax Planning Strategies

Every year, the taxes you pay reduce the returns you receive from your investments. As a high earner, you must take even more care when it comes to proactive tax planning.

Here are 13 tax planning strategies that can help you meet your long-term income goals.

You can offset realized investment gains, as well as up to $3,000 in taxable income annually, with the loss on the sale of a security. We’ll help you navigate IRS rules on wash sales. We’ll also evaluate your gains and losses to determine whether “loss harvesting” can boost your portfolio while reducing taxes from the sale of appreciated assets.

While $3,000 of capital losses can be used annually to offset taxable income, any remaining unused capital losses can be carried forward. Carryforwards are used to offset gains in subsequent years, which translates to lower future tax payments.

We can minimize your tax impact by limiting the amount of taxable events in your portfolio. This includes tax-loss harvesting, selecting investments that produce qualified dividends, and reducing capital gains distributions.

We can help you decide whether muni bonds, which are exempt from federal taxes, are right for your individual tax planning strategy. As a bonus, if your muni bonds were issued in your state of residency, your coupon payments may also be exempt from state taxes.

We’ll steer you away from higher tax rates by balancing holding periods and risk and return expectations. Securities held for at least one year before being sold are taxed as long-term gains or losses with a top federal rate of 23.8 percent. In contrast, short-term gains are taxed at 40.8 percent.

Consider the date of the distributions when buying or selling a mutual fund. You’re likely to incur a tax liability if you own the fund on the date of record for the distribution in a taxable account, regardless of how long you’ve held the fund.

We can help you evaluate the tax profile of a fund before investing. Mutual funds and ETFs vary in terms of tax efficiency. In general, passive funds (most ETFs and index mutual funds) tend to create fewer taxes than active funds (mutual funds). There can even be significant variation, in terms of tax efficiency, within these categories.

The most common trust for a minor is a UTMA custodial account. You can “gift” highly appreciated shares of stock to your child, have the child sell it, and then report a portion of the profits at the child’s substantially lower tax bracket.

Shift up to five times your annual gift exclusion limit out of your estate into a 529 account. This move will shield the growth of your money from future income taxes, so long as the money goes toward the educational expenses of your children or grandchildren.

As an alternative to donating cash, you can donate substantially appreciated securities to nonprofits and receive a write-off for the full amount. That way, you’ll save yourself the trouble of selling the assets yourself, paying taxes on the gain, then giving smaller donations to the charity.

If you give regularly to charities, consider putting several years’ worth of gifts into a donor-advised fund (DAF). You’ll be able to spread out the giving from the DAF based on your charitable intent.

Tax credits are tools used by the federal government and state governments to encourage business development. Investment tax credits are basically a federal tax incentive for business investment. You can deduct a certain percentage of investment costs from their taxes.

Certain tax-advantageous IRA conversion opportunities, like a down year in your income, are prime times to convert your Traditional IRA to a Roth with a lower tax bill. If you time your conversions well, you can remove substantial portions of your wealth from the required minimum distribution trap by the time you retire.

A 1031 Exchange, also called a Starker Exchange or Like-Kind Exchange, is a powerful tax-deferment strategy used by some of the biggest names in the real estate investment sphere. The 1031 allows you to move your investments to move from one location to another without the IRS knocking. You can avoid paying capital gains taxes when you sell an investment property by reinvesting the proceeds from the sale into another property of like-kind.

Income Tax Planning

When planning for tax impact on your income, we’ll factor in the types of income that you might receive. Common streams of income include dividends, interest, annuity payments, capital gains, inheritances, employer benefits, and government benefits.

We can help you take advantage of opportunities to manage, defer, and reduce your income taxes by assessing the following items.

The difference between tax-exempt and tax-deferred retirement plans comes down when your taxes are due: now or later. We can help you decide how much to contribute to your retirement account based on your business opportunities and anticipated expenses, such as vacations or home remodeling.

Non-qualified accounts, like Health Savings Accounts and brokerage accounts, allow you the benefit of tax diversification. Because there are no restrictions surrounding withdrawals, you’ll enjoy more flexibility regarding how and when you access your money.

Your tax liability is calculated based on your taxable income. Generally speaking, therefore, the higher your deduction level, the lower your tax liability. Proper timing of your deductions, like charitable contributions, can bring down your tax bill even further.

By deferring income to a later year, you can minimize your current income tax liability and invest the money that you’d otherwise use to pay income taxes. During your year-end tax planning session, we’ll look at different ways to time your income and deductions to give you the best possible tax result.

Additional Planning Situations for Your Future

Is your tax liability as low as it could be?

We’ll help you arrange your financial affairs in a way that reduces your tax liability across all individual, investment, and business decisions — so that you can end each year with more money.

Let’s talk about how you can save on taxes today!


We’ll help you make sure that your retirement strategy aligns with your current and evolving priorities.

Distributions and inflation can eat away at investment returns.

That’s why positive total returns aren’t the only thing we consider when building your diversified portfolio—we also make sure your investments keep pace with inflation.

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