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How can you turn tax season into teachable moments in the weeks ahead? By discussing the four investment approaches below, you can help existing and prospective clients build a better tax experience.
- Incorporate a year-round tax-loss harvesting strategy.
"Capital losses can be saved up, like coupons, to offset taxes on future capital gains. There are opportunities for year-round tax-loss harvesting in all kinds of markets, which is why it's important to harvest losses systematically and often. What are your thoughts on building up a reserve of tax losses to help reduce the gains on which you pay taxes in the future?" - Diversify concentrated positions.
"Given the concentration of highly-appreciated stocks in your portfolio, let’s explore the total amount of capital gains taxes you would pay if you hypothetically sold some or all of your stock positions. Diversifying your concentrated positions can help improve your after-tax outcome. Are you open to exploring a range of tools to help diversify your concentration risk while being mindful of tax implications?” - Determine total tax rate.
“Making smart investment decisions requires an understanding of the tax consequences for different types of investment income such as realized capital gains or dividend income. Determining your total tax rate can help us identify an investment approach to help minimize your portfolios’ tax exposure while maximizing potential after-tax returns.” - Maximize charitable impact.
"How do you feel about gifting some of your highly-appreciated stocks in lieu of cash? When you contribute stocks directly to a qualified charity or planned giving vehicle, no federal capital gains taxes are due on the contribution. You may also be eligible to receive a charitable-income tax deduction for the full fair market value of the gift, subject to 30% of adjusted gross income with a five-year carry forward on unused deductions.”
Each of these teachable moments allows you to demonstrate your value as an After-Tax Advisor.
Bottom Line: Tax season is a perfect opportunity to turn the topics of taxes into teachable moments.
By discussing four investment approaches, you can help existing and prospective clients build a better tax experience.”
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