5 Myths of Tax Planning

House made of $100 bills

They say all you need to survive is food, shelter, and love.

I think they forgot tax planning.

It doesn’t have the kind of marketing that love gets, but it’s the most unbelievably useful financial practice you might never have heard of.

Picture this: over the past 40 years you have been stockpiling savings into your employer retirement plan. But on your retirement date, it’s worth less than what the statement says. Sound alarming? Well, this would be the case if you haven’t given any thought about tax planning for those 40 years, especially around your retirement.

The IRS is not-so-patiently waiting to take anywhere from 0% to 47% of your pre-tax retirement account. Our goal as tax planner is to reduce your total lifetime tax to get you closer to the 0% than the 47%.

When I first mention tax planning, I often find that people have some pretty profound mistaken beliefs about it. Here are five myths I hear the most:

#1 – Tax planning has to be complex.

Surprised? Don’t be, even though an alarming number of tax planning “experts” insist that the only way to lower your total lifetime tax bill is to implement some ultra-obscure tax strategy. While yes, these strategies may work for a select few, the “experts” often gloss over the “boring” and easy to implement strategies.

For example, implementing annual Roth conversions, HSA strategies, or selecting between pre-tax or Roth contributions can potentially reduce your total lifetime tax by tens of thousands of dollars.

There’s an old adage that’s a great frame of mind for your tax planning strategy:

“Small hinges swing big doors.”

Little choices now can make a big difference later.

#2 – The goal of tax planning is to pay zero tax every year.

A year where you pay zero tax is a lost opportunity in the realm of tax planning. When we look at successful tax planning, we want to see a reduction in your total lifetime tax paid.

This means potentially paying more tax one year and less the next. Years with lower income can provide a great opportunity to implement a number of tax strategies (capital gain recognition, Roth conversions, etc.)

The professional doing your tax planning should be computing tax projections each year to determine what strategies are best to implement. As we like to say at Note, “pay the IRS every dollar you owe, but don’t leave them a tip.”

If your wallet’s feeling too heavy or you’re just feeling extra patriotic, the U.S. government happily takes donations against the national debt.

#3 – Your accountant does tax planning for you.

I’m sure there are some accountants who do real tax planning, but speaking from experience, the vast majority do not. While having a rockstar accountant in your corner helps, they tend to make better historians than planners.

Your accountant is more like a rearview mirror. They’re useful, but unless you plan on driving in reverse, you’re going to need someone looking down the road with you. Your tax planner is more like a windshield. It’s crucial to look through the windshield and have someone planning out your future tax strategies.

Know what’s even better? If your financial planner and accountant can work together closely to ensure the tax strategies get reported and implemented correctly.

#4 – The benefits of tax planning can be seen quickly.

Tax planning (when done right) is more like well-aged bourbon than lemonade. If you have a short-term frame of mind, you might still come out with a good outcome. But if you keep your sights on the long-term and give it years to mature, you can have an amazing product to enjoy.

There are almost always strategies to implement now to see a pay off in the short term, like safe harbor payments to avoid an underpayment penalty. But most strategies need time to mature.

For example, if we decide to do a six-figure Roth conversion, it might take decades to benefit from that strategy. But the models suggest that a conversion like that could generate seven figures worth of tax savings.

Patience can pay off.

#5 – Tax planning is only for the “rich”

Ever read a book on tax planning? Probably not! But if you had, it would probably sound like you need to own a yacht or a villa before tax planning is relevant. It’s not true!

Every person who is paying taxes can and should implement some sort of tax planning strategy.

There are strategies to utilize no matter your income or net worth. It all comes down to being intentional with your personal finances. As we’ve seen with our clients, what you give your attention to makes all the difference.

Whether that’s making the intentional choice to save in pre-tax dollars, or after-tax dollars, or both. Knowing how different retirement accounts work is tax planning. Deciding which ones are best for you and your goals is tax planning!

If you want to be intentional with your tax planning and/or your personal finances and don’t know where to start, I’d urge you to seek the help of a tax planning professional.

It’s never “one and done”.

Tax planning is not just a one-time thing. You should have eyes on your tax return and tax planning strategies each and every year.

Here’s three easy steps to get you started:

  • Review your prior year tax return. It’s important to understand your income and how it affects your total tax. Take note of your total income, taxable income, total tax paid, and marginal tax rate.
  • Understand your eligibility to contribute to pretax, Roth, and After-tax retirement accounts. Be intentional with how you will fund each.
  • If all of this seems overwhelming, I urge you to reach out to your financial advisor.

If tax planning isn’t in your advisor’s arsenal, you and I should talk! Schedule a call with me here:

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No portion of this commentary is to be construed as the provision of personalized investment, tax or legal advice.  Please consult with the appropriate professionals for advice that is specific to your situation.  Note Advisors, LLC can assist in determining a suitable investment approach for a given individual, which may or may not closely resemble the strategies outlined herein.

Does Asset Allocation Make Sense for You?

At Note, we frequently encounter business owners who tell us they get approached by “wealth” managers preaching asset allocation. These managers possess little information about them, their businesses, their objectives, or the headwinds they’re facing. These managers then readily preach about the importance of diversification and the investments that owners need to make.

The thing is, most business owners aren’t thinking about asset allocation at all. Rather, they’re focused on asset concentration.  


Because their life savings and sweat equity are tied up in their business. This is punctuated by the debt they’ve taken on in order to feed the engine of their business – their most concentrated investment.  

While asset allocation may be wise advice from an “Investment 101” standpoint, it is not an effective conversation with most small business owners. Many I’ve spoken to over the years are quick to say, “I have nothing to invest.”

However, if I have their ear, I’m able to persuade them they have everything to invest. 

They have themselves, their tomorrows, and the investments they’ve already made. With good fortune and perseverance, those assets will give them the kind of financial capital that wealth managers very much want under their management. However, it can take a decade or two before that happens. Only then does asset allocation advice become relevant.

An effective financial advisor must be able to see you – the business owner working to build equity. They must recognize the importance of promoting asset concentration, not preaching diversification. They should fully understand your business, your objectives, and the headwinds you are facing. Only then can they be dedicated to working with you to mitigate the risks associated with business ownership. Only then can you more easily move from concentration through liquidity, and onto successful allocation.

Who’s Got Your Back?

Have you ever explored the full meaning when someone says, “I’ve got your back?” 

Is it that they’re committed to watching out for you and taking care of things that you are likely to miss?

Are they dedicated to being that second set of eyes and hands for you when necessary?

Is it someone willing to help when you need assistance, even before you know you need it?

How about somebody who will literally enter into a physical battle on your behalf?

Have you ever taken the time to consider who’s got your back in your business? 

Perhaps it’s an advisor who has a single-minded area, whether it be law, accounting, or lending. 

Maybe it’s that individual who’s able to rise 30,000 feet for a broad view of your world and then tell you how your business fits in your life, particularly during stressful times. 

Maybe it’s the person who can keep the bigger picture in mind when aiding you in your day-to-day business battles. Or someone who can pull you aside – despite your protests that you ‘don’t have time’ – and offer strategic perspectives and advice you can trust.

These “have your back” individuals will ask questions that stop you in your tracks, that allow you to take a deep breath while the stress of the moment leaves your body. They do this without fear that their questions might be simple, naïve, or lacking a complete understanding of your business. 

They don’t worry if they’re the biggest thought leader or genius in the room. They’re focused on helping you slow down, making certain that you’re not ignoring the larger implications of whatever task is at hand.

They maintain the big picture, yet they are at the street level, working right alongside you. They open their network and introduce you to the accountant, the attorney, the banker, even the medical professional, and ask them for exceptions on your behalf, all because they truly believe you are exceptional. 

These are the people who see you for who you are, believe in what you are trying to accomplish, and give all they’ve got to help you get there. In effect, fully defining what it means to say, “I’ve got your back.” 

We all need someone like this, don’t we? I know who it is for myself and the impact they continue to make in my world. Who has your back, in your business, and in your life?


“What’s your AUM, Tom?”

During financial industry conferences and meetings, this seemingly innocent question surfaces almost without fail.

AUM = “assets under management.”

To me, that question is a veiled and vulgar way of trying to find out the total assets being managed by our firm. When using the term “assets,” the person inquiring doesn’t mean the humans and their lives that we’re helping to navigate. Rather, it’s all about the dollars and cents under our direction. The question they’re really asking is, “How much of other people’s money do you control?” To many in our industry, this is the badge of honor that they believe measures success.

I believe that “assets under management” is a crappy way to categorize clients.

I also believe that if all you have is financial capital, then you don’t really have all that much.

While it’s an important data point for valuing a business, it unfortunately doesn’t indicate the true value of a financial professional or their client base. At Note, we have a different standard of that value for both.

We like to think in terms of “lives under management.” 

When considering the “assets” we manage, our focus turns to people we advise. The human beings we help to successfully navigate their personal and financial challenges. Challenges such as:

  • Investing their limited resources of time and money in starting a business. 
  • Taking on the financial capital risks of borrowing money to begin and/or grow a business. 
  • Sweating-out the personal guarantees needed to secure loans in early-stage businesses, or businesses under stress.
  • Lost sleep and compromised health due to the pressures of financial and business risks. 
  • Business distractions that prevent clients from being “present” with their family, spouse or significant other, and the resultant dissatisfaction over a loved one being mentally somewhere else.

Often when we begin advising clients, they find themselves in uncharted waters as we help them navigate their “lives under management.” Yet because of our years of experience, we know the management plan we are creating for them will deliver results. We’ve seen it. We can smell it. We know it, often before those we are working with actually experience it.

We also know that helping people transition their sweat and tears into something of value, and extracting that value over time in the form of financial capital, can give them valued independence. People can live in ways that allow them increased control over their time. They can enjoy extended vacations. They create the ability to transition their business to family or employees, or sell their businesses and move on to their next venture with a smile on their face.

Most importantly, they become fully aware that they are not simply “assets under management.” They are human beings who we value and whose lives we are helping to build and enjoy.

Make Sure You’re Ready

According to a recent survey, 80% of Americans say that saving for retirement is critically important. However, only 56% are actually putting money away for their golden years.

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In 2006 U.S. Senators Gordon Smith and Kent Conrad introduced a resolution that was passed by Congress, creating National Retirement Security Week in the third week of October (this year October 18-24.) On September 2, 2020, the National Association of Government Defined Contribution Administrators (NAGDCA) updated its legislative priority to advocate for October to become National Retirement Security Month.

The purpose of observing National Retirement Security Week/Month is to raise awareness and help individuals take concrete steps towards a secure retirement. Over and above elevating public knowledge on the subject, there is also an effort to encourage employees to speak to a retirement plan consultant or expert and participate in an employer-sponsored retirement plan if available.

At Note Advisors, we are here to help you build and increase your retirement funds. While it can seem like an overwhelming process, here are some basic ways that you can start to secure your retirement future.

Start saving money

Statistics show that 32% of Americans did not start saving for their retirement until they were in their 30s. Another 13% waited until their 40s. The longer you wait, the greater the amount you will need to save each month, but it’s never too late. Start saving now.

Automate Your Savings

Have your contributions automatically deducted from your paycheck to guarantee that you are saving.

Boost Contributions as You Age

If you are over 50 years old, you can save an extra $6,000 per year tax deferred.

Don’t Rely on Social Security

Social Security was never meant to serve as a total retirement income replacement source It was meant to supplement pension income. Further, nearly a quarter of public sector employees are ineligible. Social Security benefits replace roughly 40% of pre-retirement income among average earners. While this is a meaningful supplement to other income sources, it’s hardly enough to maintain a comfortable lifestyle on its own.”

If You’re Young, Invest More Aggressively

Choosing a more aggressive investment strategy early will quickly grow your nest egg and also give you time to recoup if the market takes a dip.

Meet Your Company Match

If your company offers to match your contribution up to a certain percentage do it. It’s free money and that match can be tax-deductible for your employer as well. Diversify Add a tax-advantaged retirement account like a Roth IRA to your retirement portfolio, so that some of your saving grows tax free. 

No Company Retirement Plan?

While 28% of Americans take full advantage of their company’s retirement saving options, 20% aren’t offered a plan by their employer, or are independent contractors. If you fall into that category, consider alternative solutions, like an Individual Retirement Account (IRA). 

Speak with a retirement plan consultant or expert

Nearly 60% of Americans say they have a workable knowledge of how retirement plans operate, but 30% say they don’t have a clear vision of their own plan. If you are unsure about planning your retirement, we at GCW Capital are here to help. Contact us today and let’s work together to develop a retirement strategy that meets your needs and will fund your future.

Your Finances and the Upcoming Election

Recently we published a blog about financial uncertainties across our nation as the countdown to the 2020 US election continues. Clearly, some of the most concerning of those are potential changes to federal tax laws. That is why we decided to follow up with specific financial information and strategies that we believe could be effective should such changes occur.

Let’s start with the bottom line. A lot can, and will, change between now and the election. The reality is that no matter the outcome, proposals take time to become legislation. Additionally, to make changes to the tax code, Congress must pass a bill by a majority vote (in both the House and the Senate), followed by the president signing it into law. With the current political makeup of Congress, that path will be difficult.

None the less, if changes to federal tax laws are on the horizon post November 3rd, below are some suggested scenarios and strategies we believe could be effective in protecting your investments and portfolios, if initiated by year’s end.

Most importantly, we suggest you take this pre-election time to GIVE US A CALL to review your financial concerns and plans, and help you stay focused on a diverse portfolio allocation and wealth management plan and avoid distraction-driven election proposals.

Parts of this blog were excerpted from a Charles Schwab investment advisory.

The top marginal tax rate is raised from 37% to 39.6% for income over $400,000.

  • If possible, defer losses and deductions to future tax years, when tax rates could be higher. 
  • Initiate Roth conversions which could potentially reduce future taxable distributions. 

Tax capital gains and qualified dividends are established for incomes over $1 million at the ordinary income tax rate of 39.6%.

  • Utilize tax gain harvesting to lock in capital gains at the current preferential rates.
  • Defer loss recognition and possibly deductions to future tax years when taxes could be higher, which could increase the tax benefits of the loss deduction. 

Basis on transfers of appreciated property at death are stepped up and the federal estate tax exemption is decreased by 50% or more.

  • Gift assets to lock in the estate tax exemption and avoid losing the higher limits, which could disappear if tax policy is changed. 

Itemized deductions are capped at 28% of income.

  • Consider accelerating deductions if the 28% limit could cause some deductions to be lost in the future. 

Tax credits for middle-to-low-income households are increased.

  • These tax credits would have income limitations, and there is little higher-income households can do to qualify for them. 

The corporate tax rate in increased from a flat 28% from 21%, and tax book income of companies at an increase of 15% if they do not report taxable income.

  • Clients should review their portfolios and ensure proper diversification to help mitigate the potential negative impact from reduced corporate profits due to increased taxes. 

Start collecting additional taxes for Social Security after $400,000 of income.

Owners of pass-through businesses (such as LLCs and partnerships) could consider a transition to an S-corporation to reduce Social Security taxes. 

The tax deduction for 401(k) contributions is changed to a tax credit (discussed but not a proposal.)

  • For this year continue to contribute to a 401(k) as you normally would. 
  • Start or increase contributions to a Roth 401(k). 
  • If passed into law, those who may not receive a tax credit for contributions should consider a Roth account or saving efficiently in a brokerage account.

Parts of this blog are based on a Charles Schwab advisory publication.

Self-employed and Deferred Payroll Taxes

If you are self-employed, you shouldn’t count on the payroll tax break the president has issued via executive order — at least not yet. 

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Payroll taxes are normally shared by employers and employees. Each covers a 6.2% tax to fund Social Security, as well as a 1.45% tax to fund Medicare.Self-employed people foot the entire bill for these levies themselves, at a cost of 15.3%, and pay for them as part of their quarterly estimated taxes

The president’s executive order would suspend the employee’s share of payroll taxes from September 1st through the end of the year. It would cover workers who make no more than $4,000 per biweekly pay period or $104,000 annually. 

It is currently unclear whether this relief would apply to the self-employed, which is raising a number of tax concerns including whether employers or employees could face surprise tax consequences and compliance issues related to the executive order.

Separately, business owners, including independent contractors and freelancers, are already eligible to defer the employer’s side of the Social Security tax via the CARES Act. Under this provision, employers may choose to defer the share of tax that would have been paid from March 27 through Dec. 31. They would then pay 50% of the amount owed next year and the remainder in 2022.

With so many unanswered questions, the best course of action if you are self-employed is to continue to set aside your self-employment taxes and pay them as usual. At the very least, you should wait until further guidance is issued by the Treasury Department to decern on whether you qualify to defer this slice of the tax.

If you have questions, or need to talk about this or any other financial issues, give us a call. We’re to help

Has Your Company Suspended 401K Contributions?

The pandemic has had a major economic impact on employers as well as individuals. According to a national survey by the Plan Sponsor Council of America, as of April more than 20 percent of large organizations had already suspended matching 401(k) contributions.

The beauty of a 401(k) is that it offers tax advantages and makes regular contributions seamless. Having a match on top of that is icing on the cake—but not having it doesn’t negate the other benefits.

When money is tight, you may have to rethink and reprioritize. You don’t want to jeopardize your future, but you also don’t want to make imprudent decisions like racking up a huge credit card bill or defaulting on other commitments in order to continue contributing. 

On the other hand, if your budget still allows you to make regular contributions, you definitely should. In fact, as counter-intuitive as it may seem, now could be the time to increase your contribution to make up for the lost match. 

It’s a balancing act. So, before you decide what to do, ask yourself these questions. 

How Stable is Your Job?

When the company you work for, whether large or small, is looking at its balance sheet to find ways to economize, you want to be realistic about the future of that company. Are there layoffs ahead? Cutback in hours? If you think your position could be impacted, now is the time to make sure you have enough cash on hand to be able to make it financially.

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Do You Have an Adequate Emergency Fund?

Today’s uncertainties have brought the importance of emergency funds front and center. The standard recommendation to have enough cash easily accessible to cover three-to-six months essential expenses may even be an understatement. If your emergency fund is less than adequate, building it up should be a primary focus. 

Look at your budget. Can you redirect some dollars to this important fund? If there’s no other way to do it, you could reassess how much you’re currently contributing to your 401(k) in order to balance present financial stability with future security.

Have Your savings to Date Been Adequate?

A common employer match is 50 cents on the dollar for the first six percent of your salary. This means that if you have only been contributing up to the match, you’ve been contributing nine percent between you and your employer. That’s good, but below the 10-15 percent recommended for someone in their 20’s (an older person just beginning to save may need to contribute even more). If you’re behind in your savings already, you’ll likely have to work harder in the future to catch up.

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How Close Are You to Retirement?

This is a crucial question. If you’re far from retirement, you may feel like you have plenty of time ahead to save. However, the reality is that the earlier you start saving—and the more aggressively you save—the more time you have to benefit from potential market appreciation and compound growth. Stop saving now and you will have lost the power of time. Conversely, if you’re close to retirement and still have a way to go to meet your savings goal, every dollar you save now is essential.

There’s More to Your 401k Than the Match

While getting an employer match is a definite plus—and an opportunity you never want to pass up—there’s more to it than that. Obviously stopping contributions, or temporarily reducing your percentage, would put more dollars in your pocket and potentially help ease your cash crunch. On the other hand, it’s a trade-off, not only in terms of your future security, but also your current tax situation.

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If you have a traditional 401(k), your contributions are tax-deductible, which lowers your taxable income. Decrease or completely stop those contributions and you potentially increase your tax liability. You also decrease your long-term, tax-deferred earnings potential. If you have a Roth 401(k), you don’t get an immediate tax benefit, but the ability to take tax-free withdrawals in the future is huge.

It Doesn’t Have to be All or Nothing

If you need some extra money now for essential expenses or to boost your emergency fund, reducing your contribution (rather than stopping it completely) could make sense in the short term. Still it’s important to promise yourself that you will recommit to saving more as soon as things turn around. 

Match or no match, when it comes to long-term retirement saving, contributing as much as you can to a 401(k) is one of the best things you can do.

This blog was excerpted from an online article by Carrie Schwab-Pomerantz, CFP®, Board Chair and President, Charles Schwab Foundation; Senior Vice President, Schwab Community Services, Charles Schwab & Co., Inc.; Board Chair, Schwab Charitable

Women and Investing: Life Lessons to Learn

There are many statistics about the gender pay gap worldwide. For example, in the United States, women still only earn 82 cents to a man’s dollar. It is also well acknowledged that women, on average, outlive men. So, the importance of women saving and investing to help make up for this deficit is obvious.

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The thing is, according to a study conducted in the late 90s by Brad M. Barber and Terrance Odean, while women have many traits that would make them good investors, they are far less confident than men in their investing ability. In fact, data from several studies over the years show that even when women have investment accounts, they hold the majority of their money in more conservative holdings like bonds and cash.

The question becomes, how to get women not only to invest, but to invest more aggressively when appropriate. The following five tips can help. 

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1. Begin With an Emergency Fund

The first step to financial security is having enough cash in a savings account to cover at least three-to-six months’ worth of unexpected expenses. This fund will not only help you in case of an emergency, but can also give you the confidence to start investing and help weather a market downturn. 

2. Look to retirement

Whether you’re in your 20s or your 40s, you can’t afford to wait to start saving for retirement. And even though women are known to put others’ needs first, when it comes to retirement, you have to think of yourself. Take full advantage of a company retirement plan like a 401(k). In fact, this is a great way to begin investing. Contribute at least up to the company match, more if possible. Don’t have a company plan? Consider an IRA. The point is to save as much as you can as soon as you can. Living to 90-plus is becoming more common. You need to be prepared.

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3. Invest in stocks

Your first thought may be that you don’t want to take the risk. Market downturns definitely happen as we’ve recently seen, but being too cautious can also put you at a disadvantage. Stocks are an important part of any portfolio because of their long term potential for growth and higher potential returns versus other investments like cash or bonds. 

As evidence, consider this statistic: a dollar kept in cash investments from from 1926 to 2019, would only be worth $22 today. That same dollar invested in small-cap stocks over those 93 year would be worth $25,688 today.1

So where to begin? Many broad-based mutual funds and exchange-traded funds make it easy to invest in a cross-section of stocks. An index fund or target-date fund can make it even easier. Using a robo advisor can also be a good way to begin. You don’t have to know a lot to start; you just need to know where to start.

4. Plan for Other Financial Goals

What are your other goals—a down payment on a home, a child’s education or a vacation? Investing a portion of your savings in stocks may help you reach those goals faster, with the caveat that money you think you’ll need in three to five years should be in less risky investments. Stock investing should ideally be long-term, understanding how much risk you can stomach, and how much risk you can afford to take.

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5. Ask for Help and Advice

When you have questions, ask your benefits administrator, your broker, even a knowledgeable friend or family member—but ask. There are also lots of online investing resources to explore. Need more? Consider working with a financial advisor. 

A financial advisor is sort of like a personal trainer, someone to guide you and keep you going when you might otherwise be tempted to call it quits. He or she should understand your feelings, situation, and goals. Never hesitate to ask questions, including how your advisor is paid.

No time like the present

Time is a crucial factor in investing. If you have many years ahead of you to invest—and you commit to keeping your money invested—time will likely help you weather the inevitable market ups and downs. That’s not to say you can’t start investing later in life, but keep in mind that money you’ll need in the short-term should not be in the stock market.

That said, women need to develop the knowledge base and confidence to make the most of their hard-earned savings and build financial independence through investing. It doesn’t take a lot of money; it just takes getting started. Contact Angela Hall, CFP, if you’re ready!

[1] Source: Schwab Center for Financial Research. The data points above illustrate the growth in value of $1.00 invested in various financial instruments on 12/31/1925 through 12/31/2019. Results assume reinvestment of dividends and capital gains; and no taxes or transaction costs. Source for return information: Morningstar, Inc. Based on the copyrighted works of Ibbotson and Sinquefield. All rights reserved. Used with permission. The indices representing each asset class are CRSP 6-8 Index (small-cap stocks) through 1978, Russell 2000 thereafter; and Ibbotson U.S. 30-day Treasury bills (cash investments). Past performance is no guarantee of future results.

Parts of this blog were excerpted from an online article by Carrie Schwab-Pomerantz,CFP®, Board Chair and President, Charles Schwab Foundation; Senior Vice President, Schwab Community Services, Charles Schwab & Co., Inc.; Board Chair, Schwab Charitable

Mid-Year Tax Reviews Can Save You $$$

Every tax season, U.S. businesses owners and individual taxpayers undergo an amazing ritual. At the beginning of the year, we start collecting forms from various entities: banks, creditors, investment companies, our employers, etc.

After we have gotten all of our paperwork, we then figure out whether we’re going to waste a weekend slogging through all this paperwork, or if we’re going to outsource it to someone like a strip mall tax preparer or a CPA. Whatever we decide, our singular focus is to figure out one thing: “How big is my refund going to be?” 

If the answer is negative, meaning we owe the IRS money, that ruins the whole weekend. Whatever the result, all we know is that once we have finished—which is usually around March 15th for businesses and April 14 for most individuals— we don’t think about taxes for another year. 

Is that the right approach? Perhaps not.Here are 5 reasons why you might want to review your tax situation mid-year.

Tax Review Reason #1: Adjusting employer withholdings.

In early 2018, the IRS prescribed new withholdingtables for employers, based upon the changes in the Tax Cuts and Jobs Act of 2017. While most people will pay a lower tax bill, there are those who might pay more. However, the withholding tables are largely adjusted to withhold less in taxes which can result in a nasty double whammy for some taxpayers of paying more in taxes, but having less withholdings in their paycheck. 

You can avoid this situation by simply taking 10 minutes to check for yourself on the IRS’ withholding website. Here, you can walk through some pretty simple questions about your personal situation, income, and possible deductions. After answering these questions, the IRS will give you some suggestions on whether you need to adjust your employer withholdings. 

Tax Review Reason #2: Seeing the tax impact of specific life events.

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Sometimes, it seems that our taxes just stay the same, regardless of what we do. That is not necessarily true. Here are a few examples of specific life events that should encourage you to do a mid-year tax review.

  • If you have a child going to college, you may qualify you for a tax credit and deductions for tuition expenses. Check out the IRS Website for details.
  • If you have purchased a home for the first time and are starting to itemize deductions because of the mortgage interest and real estate taxes you are now paying.
  • If you have installed energy-efficient appliances that provide you eligibility for tax credits. Click here for more information.
  • If you are recently retired and need to figure out how your withholdings work now that your employer is no longer taking that money out of your paycheck.

Tax Review Reason #3: Sound tax advice.

If you ask a tax professional questions about your financial situation at this time of year, you are consulting them when they are not singularly focused and stressed over getting through tax season. 

You can have an enlightened conversation about this year’s tax return with the knowledge base of last year’s returns and the calm of an off-season consultation. 

Tax Review Reason #4: Learn more about your options and properly plan

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  • Planning to sell some stock? Depending on your situation, there’s probably more than one right way to do this. There are also there are many tax-inefficient ways. Talking with a financial professional before you make these decisions might help you save money on taxes.
  • Looking to increase your charitable contributions this year? Perhaps you can get more bang for your buck if you bunch itemized deductions every other year.
  • Just retired, but not ready to take money out of your IRA? Perhaps it is worth doing Roth conversions while you’re in a low tax bracket, so you won’t get a nasty surprise when you have to start taking required minimum distributions and find out you’re in a much higher tax bracket. Proper tax planning might help you figure out the best decisions for your situation.

There are so many different aspects of your life with some sort of tax impact. And it’s important to make sure you’re doing this while you still have time to make changes. For example:

  • If you need to adjust your withholdings, it’s best to do it mid-year, so you have more paychecks for those changes to take effect. **
  • If you’re looking to contribute to an IRA**, it’s probably best to spread out those contributions over the course of the year. When you do tax planning mid-year, you can always come back at year-end to see what else needs to be done, but the reverse isn’t necessarily true.

The point should be to enjoy your BEST life while remaining as tax efficient as possible. And that’s best done with proper tax planning. 


What’s next? Talk to your financial advisor. That’s us!! Note Advisors is a one-stop-shop for all of your tax review and planning needs. 

In fact, GCW Principal, Shawn Glogowski, is an Enrolled IRS Agent, which means he is licensed to practice before the IRS and, if needed, can legally advocate with them on your behalf. 

Why not get your mid-year tax review going now, before it’s too late.


Parts of this blog were excerpted from an online article by WestChase Financial Planning.

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