Should Your Tax Advisor be a Historian or a Futurist?

Be proactive, rather than reactive, about your tax situation.

Key Takeaways

  • Experts have long argued that there are two tax systems in the U.S.—one for the informed and one for the uninformed. In which group would you prefer to be?
  • Tax mitigation ranks as the second highest financial priority for most Americans—only wealth protection ranks higher.
  • Soon after April 15 is a good time to start talking with your accountant and other advisors about tax mitigation strategies for 2014 and beyond. Don’t wait till year-end.

Back in the 1930s and 1940s, an oddly named New York State circuit court judge (The Learned Hand) said that there were two tax systems in the United States: One for the informed, and one for the uninformed. I bring this up since many of you are seeing your accountants right now or planning to soon. Hopefully you’ll receive good news, but even if you don’t, never pay more than you really have to. Always be in the “informed group.”

Don’t pay more than your fair share

So, how do you make sure that you’re not overpaying? First, ask your accountant to be a historian. Get the history for last year. Report it to the IRS, and then send the appropriate taxes if necessary along with your withholding. Next, ask him or her to be a futurist. This means looking ahead for tax mitigation opportunities in 2014 and beyond.

To take the futurist approach, you’ll need to schedule an appointment with your accountant soon after April 15th (don’t wait till year end). That’s when you ask if he or she can see any obvious tax savings opportunities for the current tax year (2014). For example, many of our clients are retirees, but are not yet age 70-1/2. So, we remind them that they don’t have to take mandatory distributions from IRAs or qualified retirement plans. Why? Because in your 60s, you’re usually at a lower taxable income than in your prime earning years.

If your taxable income is under $73,800 in 2014, you’re in the 15 percent, 10 percent or even the zero-percent tax bracket. If you do things the right way (as I explain in the video above), you could avoid paying federal capital gains taxes in 2014.


There are many other deductions and credits you can leverage on both the business side and the personal side. With enough lead time, your accountant, tax attorney or other financial advisors should be able to help you find great savings opportunities for the current tax year and beyond. Sit down with them every year. If they can’t, then feel free to call us any time for valuable tax saving suggestions.

Being proactive before the end of the year can make your “history” look a lot nicer. Until next time, enjoy. Gary.

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