A tax projection is an estimate of what you may owe when it’s time to file your taxes. At WFA, we provide quarterly and year-end tax projections for clients, considering historical data, future income, and relevant expenses. This helps you prepare for the upcoming tax year and provides insight into how your taxes may change. Tax projections are an essential part of our tax planning process, designed to identify opportunities to help you save money now and in the future as well as to plan in advance for anticipated tax liabilities.
Avoid Costly Tax Payments
Tax planning can be complex and challenging to navigate, but it plays a crucial role in your overall financial strategy. As a part of the broader financial planning umbrella, tax planning helps ensure that your income, expenses, and investments are structured in the most tax-efficient way. Life-changing events, such as a new job with a higher salary, the sale of a home, the death of a spouse, or receiving an inheritance, can significantly affect your taxable income and tax brackets, leading to a large tax liability when filing. Even smaller changes, like receiving a bonus or no longer claiming a dependent, can result in underpayment penalties if not properly accounted for. That’s where WFA comes in. We help you proactively plan and adjust your tax strategy to minimize liabilities at tax time, avoid penalties, and keep your financial picture on track.
Make Appropriate Decisions
Tax projections are an excellent tool for identifying money-saving opportunities and evaluating different scenarios to determine the best course of action for both the short- and long-term. By reviewing various outcomes, projections allow for strategic decision-making and tax optimization, which can significantly improve your financial future. These projections can help you make important decisions, such as whether to do a Roth conversion, withholding on your Required Minimum Distribution (RMD), how to make tax efficient charitable donations, and whether to harvest capital gains or losses. With a clear understanding of potential tax impacts, you can make more informed choices, minimize your tax liability, and strengthen your long-term financial position.
| Throughout the Tax Year | At Year End |
| Plan for quarterly tax payments due to business or investment income | Determine when to distribute from IRA (current year or next year) |
| Adjust withholding elections | Execute Roth conversion |
| Execute tax efficient charitable donations | Calculate withholding rates for RMDs |
| Determine impact of unexpected income or inheritance | Harvest capital gains or losses |
| Determine tax efficient way to distribute money from your portfolio | Contribution opportunities for retirement, college savings, and more |
For information on estimated tax payments, click here.
For information on income tax withholding, click here.
For a list of tax strategies to minimize income tax, click here.
For information about Roth IRA conversions, click here.