Financial Planning
June 3, 2022

Planning and Preparing Your Taxes

The importance of having both in your financial plan
Stewart Willis

They are two of the most dreaded words in the English language: tax season. But for me, taxes are what I love the most about financial planning. Tax planning and preparation is what the entire staff at Asset--including myself--love most when helping our clients.

If you, like the millions of Americans that can’t stand this time of year, you are not by yourself. A new study found that around 1 in 4 Americans would rather wait all day at the DMV to renew their license than file their taxes.

Why wouldn’t they? Taxes are an extremely complicated issue. But, tax planning and preparation are an integral part of your financial plan. But a lot of people don't know the distinction between the two! So, let's start there:

Tax Preparation: A tax preparer simply files your tax return during tax season. Many use easy-to-use software options such as TurboTax or H&R Block or have a certified tax preparer file forthem.

Tax Planning: A tax planner takes a much more in-depth look at your finances and how they share strategies to maximize your deductions and minimize your tax liability.

The key difference between the two is that tax preparation is the physical act of doing your taxes. Tax planning is taking the time to brace for and navigate future tax liabilities an ultimately be tax efficient in retirement.

While filing your taxes ahead of the April deadline may take a few hours, tax planning is spending years positioning yourself and your investments to decrease your tax liability and maximize your retirement savings. The last thing you want is to finally reach retirement and have a ticking tax time bomb on your hands

So what are some ways you can decrease your tax liability? The more you understand tax credits and deductions, the more efficient you will be. If you are a homeowner, have children, work from home or have your own business, you may qualify for different deductions.

You can also reduce your tax liability by contributing to retirement savings accounts like a401(k) or a Roth IRA. Converting to a Roth IRA now will save you money on taxes when it’s time to withdraw. The sooner you do it the better because while you will pay taxes on the money you convert, all future withdrawals will be tax free.

Capital Gains Harvesting

Another way to become more tax efficient on your road to retirement is by harvesting your gains. Harvesting capital gains allows you to claim the money you've earned on your investments based on your current or future tax bracket.

We work with our clients to find the best path for them because no two financial plans are the same. What works for your friend may not work for you! Make sure you are working with a financial professional who will help you capitalize on the best tax window in history that we are in before the current tax laws expire in 2025. Our comprehensive approach includes in-house tax services and planning along with financial, retirement and estate planning.

As much fun as waiting at the DMV sounds, tax planning and preparation are two of my favorite topics to discuss with my clients. Nothing brings me more joy than seeing the smile on their faces when they see all that tax planning pay off in retirement. Planning is the best way to maximize your finances!

Stewart Willis is the founder and president of Asset Preservation Wealth & Tax, a financial planning firm in Phoenix, Arizona. Investment advisory services offered through Foundations Investment Advisors, LLC, an SEC registered investment adviser.

The commentary on this blog reflects the personal opinions, viewpoints and analyses of the author, Stewart Willis, providing such comments, and should not be regarded as a description of advisory services provided by Foundations Investment Advisors, LLC (“Foundations”), an SEC registered investment adviser or performance returns of any Foundations client. The views reflected in the commentary are subject to change at any time without notice. Nothing on this website constitutes investment, legal or tax advice, performance data or any recommendation that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person. Personal investment advice can only be rendered after the engagement of Foundations for services, execution of required documentation, including receipt of required disclosures. Any mention of a particular security and related performance data is not a recommendation to buy or sell that security. Foundations manages its clients’ accounts using a variety of investment techniques and strategies, which are not necessarily discussed in the commentary. Any statistical data or information obtained from or prepared by third party sources that Foundations deems reliable but in no way does Foundations guarantee the accuracy or completeness. Rates and Guarantees provided by insurance products and annuities are subject to the financial strength of the issuing insurance company; not guaranteed by any bank or the FDIC. Investments in securities involve the risk of loss. Any past performance is no guarantee of future results. Advisory services are only offered to clients or prospective clients where Foundations and its advisors are properly licensed or exempted. For more information, please go to and search by our firm name or by our CRD # 175083.

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