Tax Services
Tax Planning
One Financial Services has the experience and knowledge to help guide you through the maze of ever-changing tax laws and legislation.
We strive to increase and preserve your portfolio by taking advantage of current tax legislation through the development of distinct, personalized investment strategies. We advise our clients on using tactics such as Roth IRA conversions and maximizing IRA contributions throughout the tax year. We are also able to advise our clients on issues such as tax withholding on qualified account distributions and preparing tax projections to keep clients on track throughout the year.
Our team includes individuals that are Certified Public Accountants (CPA) and Personal Financial Specialists (PFS) has many years of experience in dealing with taxes, from preparation of tax returns to navigating through the evolving tax legislation. The One Financial Services team is prepared to assist you in working to maximize the personal benefit and opportunities (omitted) tax laws can present. It is our goal to help each client keep more of their hard-earned money.
This information is not intended to be a substitute for specific individualized tax advice. We suggest that you discuss your specific tax issues with a qualified tax advisor. One Financial Services and LPL Financial do not provide tax advice.
Tax Services FAQ's:
If I am not itemizing, do I still have to keep track of my medical expenses, charitable contributions, etc.?
Yes, we think you should. Our reasoning for asking our clients to tabulate their medical costs, mortgage expense, interest, and charitable contributions is to allow us to know how close you may be to itemizing. There are strategies for deductions referred to as bunching or bundling your tax deductions, especially charitable deductions, which could become beneficial if you are already close to itemizing.
By bundling or combining perhaps several years' worth of donations into a single tax year—along with your other deductions—this strategy allows you to exceed the standard deduction, thus reducing your tax liability. You would take the standard deduction in the interim years.
What does “marginal tax bracket” mean?
The U.S. Tax System has tax brackets. Your tax liability falls into one of these tax brackets; 10%, 12%, 22%, 24%, etc. The last tax bracket your income was exposed to is your marginal tax bracket. Another way to describe your marginal tax bracket is with a question: If you receive one more dollar of income, at what rate will it be taxed?
Your marginal tax bracket is one of the most often discussed topics during our client meetings. If current tax rates are low, from a 100-year historical tax rate perspective, and our tax system is the revenue source to run our government and pay its debt, it is likely we will someday face higher rates of tax than we currently are experiencing. That is why, with our clients in the lower 12% tax bracket, we discuss income acceleration strategies such as Roth IRA conversion to bring dollars voluntarily into this low bracket at a low tax cost.
Are there really any tax planning strategies for the “middle class”?
Tax deduction bundling with the use of a Donor-Advised Fund and Roth IRA conversions are two very powerful tax planning strategies.
Donor-Advised Funds (DAF) offer a level of flexibility that is not available when you give to a charity directly. DAF's allow you to put money aside for charity today and choose the charity sometime in the future. This way you can receive immediate tax benefits while you decide which organizations you will eventually support.
An IRA conversion means changing the account classification from a traditional IRA to a Roth IRA. In general, people can invest in a Roth IRA only if their modified adjusted gross income (MAGI) falls below a certain limit. But there are no income limits for conversions. Once you pay taxes on the money that goes into a Roth IRA, you are done paying taxes, provided you take a qualified distribution. Your future contributions and earnings grow tax-free.
Are all sources of income taxed the same way?
No, they are not.
For instance, capital gains and dividends from domestic companies and mutual funds can have a 0% tax rate if you are in the 12% tax bracket. Most taxpayers pay a rate of 15% income tax on these sources, with a maximum tax rate of 20%.
Can an error from a prior year tax return be corrected?
The IRS allows for amending your tax return through form 1040X. There is a three-year period from the due date of your return during which you can file an amended form.