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A Winning Combination: Tax Preparation & Planning
Here’s what you need to know.

Provided by Hilltop Wealth Solutions

Many of you have started working on your 2020 tax returns, or you’re at least thinking about them. But how many of you really think about taxes when it comes to your overall financial plan? Does it make sense to have an overall tax strategy that supports your tax preparation? Hilltop Wealth Solutions believes it absolutely makes sense. The firm has always provided advice about tax planning that can help you keep more of your money, but now the firm also provides a tax preparation service known as Hilltop Tax Solutions.

“Hilltop Tax Solutions is based out of our Mishawaka, Indiana office, but is available at each of our offices and anywhere in the country virtually,” said Hilltop Wealth Solutions Founder and CEO Erik Brenner. “Our desire is to have an integrated service that includes tax planning along with tax preparation and accounting services for businesses. With more of our clients needing to make sure they are taking advantage of strategies, such as Roth IRA conversion, it is a great asset to have the tax team in partnership with me and be able to provide our clients with the best advice for their situation.”

Kimberly Williams is the head of Hilltop Tax Solutions. She has more than 15 years of experience working with taxes in various industries.

“It’s a big advantage for our clients. I may be able to identify areas that will reduce their tax liability, or while preparing their taxes, I may see something that looks questionable. This is an instance where I can refer them to an advisor to assist or answer their questions. Maybe they’ve never used an advisor.  Our services give them an opportunity to see how tax planning could save them much more money. I also think it’s important for us to be proactive instead of reactive when we are acting on our clients’ behalf. I think offering both services accomplishes that.”

Some of you may be wondering what’s the difference between tax preparation and tax planning? Tax preparation is the process of converting all your tax documents from the prior year into a federal and/or state return that is compliant with current tax code. Tax planning is the comprehensive work done by qualified advisors to effectively manage a taxpayer’s financial situation with the end goal of minimizing current and future tax burdens. In short, effective tax planning can help you keep more of your money every year when it comes time for your tax preparation.

 “Just about every financial decision you make has some kind of tax consequence,” said Brenner. “A good tax plan will help you evaluate those decisions from a tax perspective and help you avoid common mistakes people make that can cost them thousands. Good fiduciary advisors will help you before you get to the tax preparation stage, where it is often too late to change costly mistakes.”

There are many different ways a good fiduciary financial advisor can help you develop a strategic tax plan that saves you money by helping you keep more of your money. Here is a list of some tax saving considerations in which a good financial advisor can provide advice.

  • How to take advantage of various deductions and credits
  • How to choose investments and accounts that are tax-efficient
  • Help determine tax impact of holding or selling an asset.
  • Help with strategically harvesting losses to offset realized gains in a tax year
  • How to make retirement withdrawals that are tax-efficient
  • Help determine tax-efficient ways to transfer or give assets to heirs.

 

When you have a plan that provides you with an overall tax saving strategy you can feel much better when tax preparation time comes around. Your tax preparer can then help make sure you are providing all the required paperwork and complying with the federal and state income tax laws. In 2020, because of the COVID-19 pandemic, there are some specific issues you should understand regarding taxes. The Cares Act, passed in March of 2020, provided different types of financial relief for people, but that relief has tax implications. If you lost your job and received unemployment payments, you owe taxes on that money if you didn’t have taxes withheld before you received your payments. If you own a business and received money from the paycheck protection program that money may have to be paid back if you didn’t use it correctly. Very basically, that money had to be used for business expenses only and you will need the documentation to prove it. If you used it correctly the loan will be forgiven.

“If you took advantage of the PPP loan and it was forgiven, you are not eligible for the retention credit,” said Williams. “If it was forgiven, you cannot deduct the related expenses and you must exclude loan amount when calculating your taxable income.”

Williams said people should also know that if they received a stimulus check in 2020, that money is not taxable. She says people who were eligible for a check, but for some reason did not get one, may be able to claim it as a tax credit on the Recovery Rebate Credit.  She also wants people to know that special rules regarding the use of retirement accounts in 2020 have expired. People were able to withdraw from their accounts without penalty before reaching the age of 59 and a half. They also did not have to make required minimum distributions in 2020. Everything is back to normal in 2021 for the use of retirement accounts.

Williams encourages you to get your tax returns done as soon as possible. She says you’ll get your refund faster if you have one coming, and you don’t have to worry about filing an extension. But there are other advantages to filing early. It’s less stressful and gives you more time to correct mistakes and or locate required forms. Your tax preparer will also have more time for you. Inevitably, most people wait until the April 15 deadline is near and then they rush to get their taxes done. That rush puts the burden on tax preparers, giving them less time to spend with individual clients.

“We are excited for this opportunity to offer our clients service for all their tax needs,” said Brenner. “We will continue of provide advice about strategic tax planning, and now our tax preparation service will help bring it all together.”

This Report is not intended as a guide for the preparation of tax returns. The information contained herein is general in nature and is not intended to be, and should not be construed as, legal, accounting or tax advice or opinion. No information herein was intended or written to be used by readers for the purpose of avoiding penalties that may be imposed under the Internal Revenue Code or applicable state or local tax law provisions. Readers are cautioned that this material may not be applicable to, or suitable for, their specific circumstances or needs, and may require consideration of non-tax and other tax factors if any action is to be contemplated. Readers are encouraged to consult with professional advisors for advice concerning specific matters before making any decision.

Both Hilltop Wealth Solutions and MarketingPro, Inc. disclaim any responsibility for positions taken by taxpayers in their individual cases or for any misunderstanding on the part of readers. Neither Hilltop Wealth Solutions nor MarketingPro, Inc. assume any obligation to inform readers of any changes in tax laws or other factors that could affect the information contained herein.

This article was researched and written by the staff of Hilltop Wealth Solutions. It is one of many that are published on our website at hilltopwealthsolutions.com.

For more information on this article contact
Tim Ceravolo at 574-675-9277 or 574-889-7526

574.889.7526 | toll free: 833.889.7526
fax: 574.889.5392

email: info@HilltopWealthSolutions.com www.HilltopWealthSolutions.com

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