The Advantages of Combining Tax and Financial Planning

Apr 15, 2014 2:05:36 PM / by Jason Shaw

tax and financial planning

Financial planning involves more than simply understanding how to invest your money to balance risk and return.  To be truly effective, it must include a tax strategy as well.  Virtually every financial move you make has tax implications, which affect your return on investment.  For that reason, it pays to work with financial professionals who specialize in both tax and financial planning.

Saving for Retirement

There is a range of tax-favored retirement options available.  How do you know which is the best place for your retirement savings?  It will depend on a variety of factors, including your present and projected income levels, employer-sponsored options, and employment situation.  These variables will help determine what type of plan and what level of contribution will provide you with the greatest benefit.  For example, lower-income earners benefit from the Savers Credit, and there are limits to tax-deductible contributions to a traditional IRA or 401(k).  If you change jobs and have a 401(k) with your current employer, the question of whether to keep your current account, cash it out, or roll it into a new plan will have different effects on your tax obligation.  A financial advisor who is well-versed in the tax code will be able to help you navigate the tax consequences of various accounts and help you to allocate your funds accordingly.

Education Planning

If you wish to save for your child’s higher education expenses, you have a variety of tax-advantaged college savings plans available to you.  529 plans, Coverdell education savings accounts, U.S. savings bonds, and UTMA/UGMA custodial accounts have different tax benefits for saving and penalties for non-qualified use of the funds.


2013 saw important changes in the taxation of investment income for some Americans.  Depending on your income level, the Net Investment Income Tax (NIIT) and the Additional Medicare Tax, implemented to help fund the Affordable Care Act, may necessitate a change in how you manage your investments.  Because the tax code sees many changes every year, it is crucial that your financial planning professional keep abreast of these developments and fully understand the shifting consequences of your investment strategy.

Estate Planning

You have many choices when it comes to estate planning, including gifting, trusts, direct bequests in your will, contributions to education savings accounts, and charitable donations.  Each strategy has its own tax consequences.  An estate planner with a thorough understanding of taxation will best be able to navigate these options and advise you about how to get the largest proportion of the resources you leave behind into the hands of those you care about and minimize the share to which Uncle Sam can lay claim.

Small Business

If you own a small business, you can realize tax benefits for providing your employee's resources for their own financial needs.  For example, the Affordable Care Act provides a tax credit for small employers who provide health insurance, and another credit is available for small businesses that set up retirement plans for their employees.  There is also a credit for employers who hire individuals in certain at-risk categories, including veterans, Temporary Assistance for Needy Families (TANF) recipients, youths, and others.  A financial professional who is well-versed in both tax and financial planning can help you understand the complete cost/benefit picture of pursuing these kinds of strategies for your small business.

Boelman Shaw Tax & Financial Planning combines expertise in tax and financial planning.  This integrated approach helps us to both grow and protect our client’s financial resources at the same time.  We are in a unique position to assess our client’s financial planning goals and strategies in the context of their tax consequences to make the most of their savings and investments.

Tax and accounting services provided through Boelman Shaw & Company, LLC. Advisory services provided through BSC Capital Partners, LLC a state of Iowa registered investment advisor.

Topics: Financial Planning, Tax Services

Written by Jason Shaw