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Income Tax Planning is Best Done Early!

A successful married man and woman from Philadelphia’s Main Line frequently complained about the taxes they had to pay to the IRS. To learn if the annual tax bill could be reduced, they took advantage of tax planning services and advice at HFA.


tax planning

Similarly to most Americans, this couple’s taxes will most likely be their single largest lifetime expenditure. However, HFA’s strategic tax planning services helped them to minimize their tax liability, enabling them to keep more of what they earn. HFA has provided income tax planning services throughout Philadelphia’s Main Line and Chester County for years, gaining the expertise necessary to provide tax planning services to meet this couple’s unique needs and goals.

Our income tax planning experts evaluated the couple’s financial situation from a tax perspective, and then optimized their financial plan for tax efficiency. A review of the couple’s most current tax return revealed how much taxable income was being generated from investments. The planners discovered interest that was taxed as ordinary income. They suggested investing in municipal bonds, which incur no federal tax on interest. The planners also uncovered additional taxes because capital gains were derived on an annual basis from mutual fund distribution. Applying the best use of monies concept for their investment allocation and considering the new net investment income tax, the planners suggested tax-efficient investment strategies to help minimize taxes from capital gain distributions on an ongoing basis.

The next step in HFA’s income tax planning process was to review the husband’s company benefits. His employer, a large pharmaceutical firm, paid not only his salary, but a bonus and short and long-term incentive-based compensation, as well. HFA planners helped make sure he was maximizing his 401k plan contributions, including its catch-up provisions. They reviewed his stock options, restricted stock awards, deferred compensation and performance awards. Considering their client’s anticipated retirement date, they helped coordinate the timing of when company incentive stock awards should be sold with overall income and tax objectives. They discussed the possibility of taking some compensation now and deferring a portion past his retirement date. A long-term income tax plan was established which optimized value from the company incentives while minimizing taxes.

A final analysis of all itemized deductions revealed further tax-reduction possibilities. The planners noted that charitable gifts of appreciated stock could help reduce company stock exposure and may provide a tax-advantaged charitable deduction. They also were sure to deduct investment advisory, financial planning and tax preparation fees.

The income tax planning services provided by HFA helped to minimize the couple’s tax liability and a more tax-efficient investment strategy maximized the after-tax value from the client’s company benefits.

The Moral of the Story: Taxes, though inevitable, can be minimized through strategic tax planning services.


The case studies presented are hypothetical in nature and intended for illustrative purposes only to demonstrate the range and scope of services that are provided by HFA to its clients. Individual advice and results will vary based on each client’s circumstances, objectives and prevailing economic conditions.

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