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Chicago Office

350 N Orleans St,

Suite #9000n
Chicago, IL 60654

Second Quarter Updates - Tax Planning

April 22, 2021

Second Quarter Updates - Tax Planning 

There is still time to make contributions toward your 2020 IRA and ROTH IRA contribution limits.  Contact us if you have questions or would like to make a last

minute contribution.


How do tax brackets work video? 


Last year was a special year with several changes, exceptions and rule revisions specific to 2020 tax obligations. COVID-19 and specialized legislation to help support tax payers, businesses and the economy had a drastic impact on a number of tax returns.  So much so, the filing deadline for individual returns has been delayed until in May 17th, 2021.


Recommended Homework for Spring 2021 


Time to review your taxes from 2020 and start building a tax strategy for 2021.


Looking forward, 2022 and into the 2020s, it would be wise to plan for higher taxes.  Municipalities, states and the federal government have accumulated a lot of debt to bridge the economy though the COVID-19 pandemic.  This comes after several years of economic growth built on trillion dollar deficit spending. 


It is the opinion of Sterling Edge Financial that financial plans assuming current tax rates into the future are at risk to tax increases.  We recommend reviewing and building a plan that assumes higher taxes.


More information on 2021 Proposed Tax Increases 

More Information on Proposed 2021 Tax Increases for High Income Earners


Client Homework / Recommended Action

Why do we need your tax return?


Having an understanding of your tax obligations is key part of the financial planning process.  There are many things we can do to help manage tax obligations and create ongoing tax alpha (excess returns from tax planning). 


A few examples include

  • Ensure and maximize contributions to accounts that provide tax deductions and tax credits
  • Perform tax loss harvesting of taxable investment accounts
  • Implement investment strategies that are managed to minimize taxes 
  • Evaluate location of assets for tax efficiency (asset location) 
  • Plan for major taxable events and review strategies to limit or manage tax obligations, such as the sale of a business, rental property or other asset
  • Using alternative assets and private places to capture additional deduction, tax credits and tax preferred distributions
  • Open individual retirement accounts and qualified retirement plans for business
  • Evaluate charitable giving by way of donor advised fund strategies

Working with your tax professional typically leads to additional value for your financial plan and enhanced understanding of how to think about your tax obligations and more realistic expectations of future obligations.  We recently had a conversation and tax review with a client and their tax professional that resulted in our client saving an additional $5,300 in taxes.  


What some help with your taxes?  Looking for more tax advantaged strategies?  Upload a copy of your most recent tax return and provide the contact information of your tax professional by email or in eMoney.  Then schedule time to discuss your interests in more detail.  If you do not have a tax professional, we can introduce you to a tax professional to help you with your tax concerns.  Take time to complete this short form to Request an intro to Tax Professional.