Get the Gould on Tax and Wealth Management Planning

Tips for Consultants, Entreprenuers and Small Business Owners

As a former banker and financial services professional who is now a multimedia content creator (director, producer and writer) and has the luxury of working with incredible talent and service professionals from so many different industries, many of whom are contractors or freelancers, I appreciate the value in education.

Whether it’s about saving on taxes for retirement or knowing how to tell a story that builds audiences, these professionals have insight to share about what they do that may help you.

Respectively, this is the first of a series of articles focused on my network of talented professionals who are also entrepreneurs and in the business of helping others reach their dreams.

 

Meet Garrett Gould, co-founder and lead financial planner for Halyard Financial, LLC, a firm he launched in 2018 offering comprehensive financial planning with a focus on long-term tax management. He has passed all three levels of the CFA exam and is close to becoming a chartered financial analyst (CFA).

Gould, an Enrolled Agent since 2016 who has been working in tax planning for over five years, helps a variety of clients –  college graduates, young professionals, recently retired individuals, small business owners – prepare for retirement. He is invested in ongoing education for the latest developments in the tax code to create effective tax plans for the diverse needs of his clients.

As an entrepreneur himself, Gould enjoys working with service-based small business owners, with few to no employees, because he believes that they offer the most opportunities for tax planning and wealth management.

On this article, he provides guidance on what he does as a tax and wealth management planner.

Me: What is tax planning?

Gould: Tax planning is the reduction of lifetime taxes through proper tax management. It’s a high-level strategy to map out the amount of taxability of your income over the rest of your life and to determine the best ways to reduce your total tax liability by deferring income at high tax brackets and creating revenue at lower tax brackets.

Me: What is the common misconception about what you do?

Gould: Tax management does not always mean saving taxes today. Many people misunderstand the difference between tax savings and tax deferral.

For instance, if during retirement an individual’s tax bracket is the same or higher than what it was when the person saved into a 401(k) account, defined by the IRS as “a qualified plan that includes a feature allowing an employee to elect to have the employer contribute a portion of the employee’s wages to an individual account under the plan,” the individual has “lost the tax game” because tax payments will be higher than the benefit received.

As a general rule, your taxes will likely be lower during retirement than when you are earning an income. However, it is possible that during retirement your tax bracket could be the same or higher than when you were saving due to the obscure taxation of Social Security and the Medicare Premium Adjustment.

Me: How do you help small business owners?  

When working with small business owners, it is crucial to take into consideration all the costs and benefits to make the most effective recommendation. For example, non-discrimination rules force owners to contribute a minimum to employees’ accounts to use 401(k) plans. As a result, small business owners with employees may not receive benefits from these types of tax deferral accounts because of the costs associated with implementing the tax deferral programs. In these cases, I work with my small business clients to find the right solution.

Me: How do you develop the right tax planning strategy for your clients?

In tax planning, I focus more on client opportunity than client need. Most people do not object to paying fewer taxes over their lifetime. However, my clients have substantially different types of opportunities. For instance, a W2 worker with a low savings rate cannot benefit from tax incentives like a solo-S Corp owner with no employees and who is well-positioned to save.

Also, many opportunities can benefit clients based on age and income variability. If you are a contractor with low to no yearly income, you may be wise to create income to utilize deductions. If you are retired and not receiving Social Security, you are in the best time of your life to generate income because once you start collecting Social Security, your tax bracket will likely double. If you are 70 ½ or older, you can take a full deduction for all charitable giving without itemizing as long as you have an Individual Retirement Account.

Therefore, over the course of a person’s lifetime the tax planning needs will change based on age-based opportunities.

What are the fundamental mistakes you see people making with their taxes?

The biggest mistake is not to have a tax plan. Most people build wealth and pay taxes passively.

There is a huge consequence to solely save all of your money in 401(k) and tax-deferred accounts for retirement and that consequence is that you are subject to pay whatever tax rates Congress decides you should pay, which may threaten your financial security during retirement if your retirement plan did not include an increased tax bill.

Having tax-income diversification and creating a plan to minimize your tax burden gives you the power to control your tax situation – not Washington.

Also, people should think about their financial goals when determining their long-term strategies. It may make sense to save more in tax-deferred accounts if your goal is to give all your money to charities when you die.

On the other hand, if your goal is to pass along an estate to your children or family, then it may make more sense for you to create income now to deplete your Traditional IRA if you are in a substantially lower tax bracket than your children. This will help your children avoid required minimum distributions on their inherited account that they are forced to pay taxes on.

However, if you want to start your own business in a few years, you may need to save outside of retirement accounts and avoid tax incentives to have the liquidity required to start a business.

The right tax strategy shouldn’t be blind to your overall financial goals but instead should complement and help you achieve them.

Gould’s Tips:

You have two choices to manage your taxes and wealth: either you must learn all of this yourself or hire a dependable expert who is looking out for the best opportunities for you.

Instead of working with a tax preparer, you can save money by using tax software programs such as TurboTax.

Find someone who will generate ideas and earn their fee. Be willing to sacrifice wealth in the short-run in order to build more in the long-run.

Paying taxes is mandatory, but you have more control than you think. Be open to new ideas and take advantage of the opportunities given your current situation, age and income bracket, etc.

Don’t be passive with tax planning.

How to Contact Garrett Gould:

For individual questions or guidance on tax and wealth planning, you may either send an email or on visit Halyard Financial’s website. You can follow him on Facebook and Twitter where he shares articles and on all areas of financial planning.

Halyard is location independent, which means they can work with clients anywhere in the United States. They offer a complimentary financial goal and tax planning session and follow-up letter with recommendations.