5 Benefits of Early Tax Planning With a Financial Consultant

Posted: April 2, 2024

Couple sitting in an office with financial consultant looking at documents

Tax planning is a crucial component of personal finance and is a great way to optimize your financial strategy. By incorporating tax planning into your overall financial plan, you open the door to potential tax savings and other tax benefits. When it comes to tax planning, the earlier, the better. Meeting with a financial consultant toward the beginning of the tax year can provide several advantages.


1. Maximize Your Credits and Deductions

Each tax deduction and credit have specific criteria that need to be met in order to claim them. With early planning, you’ll be able to maximize those deductions and credits throughout the year. That way, by the time tax season rolls around, your tax liabilities may be significantly reduced. It can also help you maintain the proper paperwork for each of these credits and deductions so you’re ready when it comes time to file your return.

2. Make Asset Allocations More Efficient and Strategic

One of the foundations of tax planning is strategically allocating assets to manage tax liability. Various investment strategies, such as tax-advantaged retirement accounts, can mitigate taxable income and gains on different investment vehicles. Knowing how these investments work and how they are taxed is something a financial consultant may be able to assist you with during the investment process. This makes proper tax planning essential when making investments throughout the year.

3. Improved Financial Decision Making

When you plan ahead and know your tax implications in advance, you may find it easier to make financial decisions. Understanding the potential tax implications of business decisions, investments and retirement plans may allow for more sound decisions and better overall financial strategizing for the future.

4. Better Opportunities for Income and Expenses

Planning early can provide better insight on timing for delaying your income and expenses. Deferring certain income or expenses into future tax years may be beneficial. Changing future taxable income into different brackets may be more useful or allow you to take advantage of a future tax incentive later.

5. Save Time Preparing for Next Year's Taxes

If you incurred a higher tax burden than anticipated for the year you could benefit from early planning on your upcoming tax year. When meeting with your financial consultant, they can look at your assets to see if they are being appropriately managed to meet useful tax advantages and work toward avoiding potential issues that may increase their tax burden. Once these issues have been addressed, they may need to look at your income and withholding to make adjustments and reduce your final tax bill for the following year.


Make the Most of Early Tax Planning

While it is easy to see that early tax planning has benefits, preparing before meeting with a financial consultant can make the process run even smoother. Here are some tips to make the most out of a tax planning session.

Keep Accurate Financial Records

Having organized and accurate financial records can make tax planning efficient and successful. This includes properly accounting for all income, receipts of all expenses and records of all investment transactions. This will provide a clear financial picture and help a financial consultant identify potential tax deductions, credits and other tax-mitigating opportunities that may have otherwise been overlooked.

Stay Knowledgeable About Tax Saving and Tax-Advantaged Accounts

Whenever opportunities for tax savings arise throughout the year, you can take advantage of them to minimize taxes at the end of the year. This includes tax-advantaged accounts such as Education and Health Savings Accounts (HSA), which offer tax-deductible contributions and tax-free withdrawals for qualifying expenses, allowing you to pay for necessary expenses while managing taxes.

Keep in Contact With Your Financial Consultant

While planning your taxes early is an excellent idea, you should also stay in contact with your financial consultant whenever you’re thinking about new investment assets or anything that may affect your tax situation. This will help you make informed decisions from the start so you can avoid costly tax implications and continue aligning your tax plan with your future financial goals.

Find a Financial Consultant Near You

At Landmark Investment Center (LIC), our financial consultants are located throughout Southern Wisconsin. They offer free consultations and can help advise you on taxes as well as other financial topics like retirement planning, estate planning, annual portfolio review, investment portfolio analysis, mutual funds and annuities. Get personalized guidance to set your financial future up for success.

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