The Morning Journal (Lorain, OH)

Put Together A Profession­al Team to Help You Reach Your Goals

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As you work toward achieving your goals in life, you will need to make moves that contain financial, tax and legal elements, so you may want to get some help – from more than one source.

Specifical­ly, youmight want to put together a team comprised of your financial advisor, your CPA or other tax profession­al, and your attorney. Together, this team can help you with many types of financial/ tax/legal connection­s.

For starters, you may decide, possibly upon the recommenda­tion of your financial advisor, to sell some investment­s and use the proceeds to buy others that may now be more appropriat­e for your needs. If you sell some investment­s you’ve held for a year or less and realize a capital gain on the sale, the gain generally will be considered shortterm and be taxed at your ordinary income tax rate. But if you’ve held the investment­s for more than a year before selling, your gain will likely be considered long-term and taxed at the lower, long-term capital gains rate, which can be 0%, 15% or 20%, or a combinatio­n of those rates.

On the other hand, if you sell an investment and realize a capital loss, you may be able to apply the loss to offset gains realized by selling other, more profitable investment­s and also potentiall­y offset some of your ordinary income. So, as you can see, the questions potentiall­y raised by investment sales – “Should I sell?” “If so, when?” “If I take some losses, how much will they benefit me at tax time?” – may also be of importance to your tax advisor, who will need to account for sales in your overall tax picture. As such, it’s a good idea for your tax and financial advisors to communicat­e about any investment sales you make.

Your tax and financial advisors also may want to be in touch on other issues, such as your contributi­ons to a retirement plan. For example, if you are self-employed or own a small business, and you contribute to a SEP-IRA – which is funded with pre-tax dollars, so the more you contribute, the lower your taxable income – your financial advisor can report to your tax advisor (with your permission) how much you’ve contribute­d at given points in a year, and your tax advisor can then let you know how much more you might need to add to move into a lower tax bracket, or at least avoid being bumped up to a higher one. Your financial advisor will be the one to recommend the investment­s you use to fund your SEP-IRA.

Your financial advisor can also help you choose the investment or insurance vehicles that can fund an estateplan­ning arrangemen­t, such as an irrevocabl­e living trust. But to establish that trust in the first place, and to make sure it conforms to all applicable laws, you will want to work with an attorney experience­d in planning estates. Your tax profession­al may also need to be brought in. Again, communicat­ion between your various advisors is essential.

These are but a few of the instances in which your financial, tax and legal profession­als should talk to each other. So, do what you can to open these lines of communicat­ion – because you’ll be one who ultimately benefits from this teamwork.

Edward Jones, its employees and financial advisors cannot provide tax or legal advice. You should consult your attorney or qualified tax advisor regarding your situation.

This article was written by Edward Jones for use by your local Edward Jones Financial Advisor.

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