You should consider strategies that reduce income taxes but not at the expense of greater earnings or diminishing your lifestyle.Tax planning can be tricky. The wisest choice is to hire a tax professional or wealth manager who will consider your individual circumstances and counsel you on the best way to take advantage of current tax laws.
A common mistake is to wait and see what happens. Congress has been known to make significant changes to the tax code late in December, leaving taxpayers little time to react. I advise a diversified approach to tax planning. Make a partial Roth conversion and harvest some capital gains. Don’t wait until it’s too late to do anything about rising taxes. A proactive approach to tax planning this year can cushion any fall from the fiscal cliff.
– Rick Rodgers is a certified financial planner, president of Rodgers & Associates in Lancaster, Pa., and author of “The New Three-Legged Stool: A Tax Efficient Approach to Retirement Planning.”
