10 Tax Planning Opportunities Before Year End For Individuals

The tax due date of the current year is in April of the following year. However, when it comes to tax planning, you should not wait until then. Tax planning is different than tax preparation which I covered in my previous blog post here. There are some tax planning opportunities you can only take advantage of before December 31. This week I will only cover individuals. Business owners will be covered in a different post.

After-Tax 401(k) Contributions: Uncommon Tax-Advantaged Way To Save For Retirement

Most people are probably contributing to or at least have heard of a 401(k) plan. Some of you may have a choice to make Roth contributions instead of the regular pre-tax contributions to your 401(k) plan at work. How about non-Roth after-tax 401(k) contributions? This week I will help you understand what it is, how it works, and who can benefit from it.

Tax Preparation VS. Tax Planning

Many people expect to save the most amounts of taxes by hiring a professional to prepare their tax return. However, you may be surprised to learn that you could probably get some additional tax savings after your professional tax preparer’s work.  Recently, a fellow fee-only financial planner shared a story with us. He reviewed five tax returns prepared by an experienced CPA, and he was able to find extra tax saving opportunities from four out of the five tax returns. Other advisors and I also have the same experience. This week, I am going to explain the difference between tax preparation and tax planning, and how to get some real comprehensive tax planning advice.

PFIC: Why You Probably Do Not Want To Invest Funds Outside The U.S.

There are so many great companies and investment opportunities outside the U.S. If you read the article I shared on my blog before, you would know that I am a big fan of global investment. However, when it comes down to selecting investment companies and vehicles, you probably do not want to choose the ones organized outside the U.S. Without considering any potential country-specific currency risk, inflation risk, political risk, or liquidity risk, the most significant hurdle that the U.S. investors are facing is the punitive federal income tax treatment imposed by the IRS.

For those who currently have investment accounts in other countries, you could check out my previous blog here to figure out whether you need to report it and how to report it to the government.

This week, I will help you get some basic understandings of what investments are subject to the punitive income tax treatment, how bad the tax treatment is, and what you could do to make it less bad.