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Op/ed: Tax deadlines can help you reach your financial goals


By Jean-Luc Bourdon on May 24, 2013

With this year’s tax season behind us, it is now time to take the next steps to maintain personal finances in good order. After filing your taxes, it makes good sense to evaluate your tax strategy and review all other aspects of your financial life. Constant changes to the tax code and your evolving personal circumstances make tax planning particularly dynamic. The stakes involved make it worthwhile.

In 2013, Americans will pay $4.22 trillion in federal and state taxes, according to the Tax Foundation. Are you curious about how much total taxes you personally pay? The website www.totaltaxinsights.org can help you find out and will likely surprise you. Changes effective in 2013 create additional layers of tax complexity which individuals need to become familiar with. In prior years, federal and state income taxes, capital gain taxes, the Alternative Minimum Tax , or AMT, and payroll taxes — among other things — already created multiple taxation schemes. This year, the additional complexity makes holistic tax planning an increasingly multi-faceted challenge.

For example, due to the new 3.8 percent Medicare tax on investment income, there are now essentially four long-term capital gains tax brackets: 0 percent, 15 percent, 18.8 percent, and 23.8 percent.

For federal income taxes, there is now one additional tax bracket: 39.6 percent. The phase-out of itemized deductions and personal exemptions is coming back after years of absence. This adds to Proposition 30 changes which, last year, brought California’s maximum marginal income tax rate to 13.3 percent — the highest in the country!

Unfortunately, much planning is attempted reactively at tax time. While some tax strategies can still be used then (e.g. IRA, SEP, HSA contributions), the most valuable opportunities must be seized pro-actively before Dec. 31. Those who do plan ahead sometimes evaluate this year’s taxes by entering current projections in the prior year’s tax preparation software. Beware that this method will miss the most potentially significant changes applicable in 2013.

Taxpayers with less than $200,000 of yearly income aren’t generally affected by the most disadvantageous changes of The American Taxpayer Relief Act of 2012. Yet, at any income level, tax planning is the next logical step to capitalize on the effort you already invested in tax preparation.

Because tax permeates all aspects of personal finance, tax deadlines naturally lead to revisiting other aspects of financial planning, including investment, estate, retirement, education, charitable planning, as well as risk management and asset protection.

As such, tax deadlines can help reach your overall financial goals. Take full advantage of April 15, the tax payment deadline, Oct. 15, the last tax-filing deadline, and Dec. 31, the tax strategy deadline. Each deadline offers a convenient reminder to periodically check your financial vital signs. Of course, sound personal finance management is a year-round process and good financial health comes from daily routine. But periodic reminders help bring awareness, purpose and discipline to your day-to-day personal finance decisions. As a result, establishing annual financial habits can not only help minimize your taxes, but also reach and protect what matters most to you.

• Jean-Luc Bourdon is a certified public accountant, wealth advisor and principal with BrightPath Wealth Planning, LLC in Santa Barbara, Camarillo and Westlake Village.  He serves on the Personal Financial Specialist Credential Committee and task forces of the Personal Financial Planning Executive Committee of the American Institute of CPAs.  Contact him at jeanluc@brightpathwealth.com.

— This information is for information purposes only and is not intended as tax, legal, or financial advice for any particular individual.