2021 - 2022

Executive Tax Planning 

Ask Yourself These Questions

 

​Proactive tax planning is more ever in the post-pandemic world. Why?

 

Most if not all individuals have leveraged the 2020 -2021 pandemic era to re-assess personal and professional priorities, and have re-assessed long-term personal lifestyle and professional options with significant tax consequences that were not previously planned for or anticipated. For example, in 2020 - 2021, we have many clients who have - or are in process of:

1) adjusted to a significant upward or downward shift in household income

2) executed a career change

2) relocated out-of-state

3) worked remotely across California's borders

4) bought or sold a home, rental property or business

5) launched a new business or side business venture

Solidifying 2021 & 2022 Federal and State tax projections incorporating final year-end moves to further minimize effective tax rates and tax cash outflow figures is an intelligent, and necessary exercise for those that take their family's finances seriously.

With year-end just weeks away, there is no logical excuse for setting yourself up for the risk of an expensive and unnecessary year-end tax surprise and potentially missing out on strategies with multi-year tax benefits that may perfectly align with your financial structure and professional goals. 

As the 2021 Thanksgiving Holiday comes to a close, take a few moments to ask yourself the following questions: 

  1. Have you projected 2020 Federal and State tax cash outflows and effective tax rates factoring in all relevant 2020 events and decisions based on your unique financial, tax and household structures, and comfortable wiht the results? 

  2. If no, why? 

  3. If you have solid projections in place, do you feel the 2020 effective tax rates you are on-target to achieve are competitive with those achieved with individuals and peers at your level with similar financial, tax and household structures and lifestyle objectives? 

  4. If yes, how did you arrive at this conclusion?

  5. In 2020, have you worked remotely outside of California's borders during the pandemic while maintaining California residency status (or planning to do so in 2021) and aware how state taxes remote workers, each state's tax filing requirements, and the risk of non-compliance?

  6. If you have a substantial concentrated stock position from RSUs/GSUs have you explored IRS-approved strategies you may qualify that may be available to diversify the position and defer capital gains?​

  7. The tax implications of major financial decisions are often broad. If a financial, real estate or real estate adviser recommends a transaction thought to produce a financial benefit, how do you intelligently assess the impact of decision execution on your bottom line 2020 and 2021 Federal and State tax positions – factoring in the indirect impact on items such as income phase-outs and limits, state itemized deduction phase-outs, NIIT, AMT, etc.  and your specific financial, tax and household structures?

  8. In 2020, did you relocate from California or evaluating relocating out-of-state in 2021? If yes, are you aware of California residency and part-time residence tax laws, and the "tax traps" that many well-meaning individuals fall into that classify them as California residents for tax purposes after their move, and the penalties for non-compliance?

  9. If a member of your household voluntarily changed careers in 2020 or was unexpectedly laid-off during the pandemic do you have solid full-year 2020 projections modelling the impact on 2020 taxes vs 2019? 

  10. If you own existing residential real estate rental property or purchased a new rental property, or a member of your household is an owner, member or partner in a business are you confident you are managing the properties or and/or entities to maximize tax benefits in light of COVID-19 financial events and legislation?

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How do you feel?

 

If you don't feel in full control of your tax affairs after answering the above questions, reach out to get our conversation started. We’ll invest the time to understand your current state and future state objectives, identify un-tapped 2021 tax savings opportunities and 2022 tax moves you need to consider, model various scenarios and the tax consequences, provide professional insight and get your questions answered.

 

Natalie C. Papagni, CPA

Founder - Principal 

650.930.9562 | 877.223.5678

npapagni@cobaltpacwestadvisors.com 

www.cobaltpacwestadvisors.com