Tax Planning In San Antonio, TX

When it comes to your taxes, there’s no question that you want to minimize your tax liability as much as possible. After all, who wants to pay more tax than is absolutely necessary? Minimizing taxes is legal. Avoiding taxes is illegal. 

If you live in or are retiring in Texas, and are seeking strategies that will help you minimize your taxes during retirement, this quick guide will give you everything you need to know about tax planning.

When it comes to protecting your wealth, PAX financial advisors in San Antonio, Texas have the tools and specialized knowledge that you need to achieve your goal of a tax-efficient future.  If you have been worried about how to retire during a volatile market, you are not alone, and qualified help is here to help you.

Chapter 1

Want to minimize taxes during your Texas retirement?

Tax planning for a Texas retirement is anything but simple. In fact, it can be downright difficult to figure out the best way to minimize your taxes while living in San Antonio. The following factors can make tax planning even more complicated:

  • You have a high net worth (liquid assets)
  • You have a substantial income
  • You have multi-generational needs
  • You live in San Antonio (or another city with higher property taxes)

If you're uncertain about how to get started with the various types of planning that will help preserve your wealth, find the right financial advisor who aligns with your beliefs at PAX! We'll help you create an effective plan that will keep as much money in your pocket as possible.

Read: Is It Expensive To Live In San Antonio Texas? How Long Will Your Retirement Funds Last?

Chapter 2

Which is better for me, a Roth IRA or a traditional IRA?

Roth and traditional IRAs are both Individual Retirement Accounts. You can contribute to either type of account and deduct the amount of the contribution from your taxable income for that year. You're taxed on withdrawals from traditional IRAs when you retire, you must make a strategic decision now. Are you better off contributing to a traditional IRA with pre-tax dollars or a Roth IRA with after-tax dollars?

Contributions to Roth IRAs are taxable, but appreciation and distributions are not taxable. This makes Roth IRAs particularly tax efficient for younger investors who expect their tax brackets to increase over time when they are earning more income. If your tax rate stays the same or goes down after you retire, then a traditional IRA might be better suited for your needs because more savings can be invested at the beginning. 

Read: Why You May Need Less For Retirement Than You Think

Ask our PAX professionals about taxes related to retirement accounts:


Chapter 3

How charitable contributions in Texas can help reduce your taxable income

If you want to reduce your tax bill, charitable contributions may be the way to do it. In fact, in Texas, charitable giving is one of the most popular ways that taxpayers can lower their tax bills. There are several different types of charitable giving strategies you can use as a Texas resident.

You can donate cash or property (cars, securities, collectibles) directly to a nonprofit organization or use items like clothing and household goods from your home as part of a donation drive organized by a nonprofit organization.

Some people choose to donate stocks, bonds, and mutual funds through their broker with a full market value deduction on their income tax returns. This type of contribution requires expert advice on the part of the taxpayer before deciding what to give and how much each year. Contributions can reduce taxable income and the payment of capital gains taxes. 

A Charitable Remainder Trust is a popular strategy if the donor requires income. For example, people have an appreciated asset like a common stock. They can donate the asset to a charity and take a tax deduction. The charity can sell the asset tax-free. The donor can be an income beneficiary of the trust for a prescribed period of time or the lives of both spouses. 

Chapter 4

Tax planning strategies for high net worth individuals in Texas

high net worth investors planning is crucial for everyone, especially the wealthy. In general, the more money they have the more taxes they have to pay. In fact, taxes can have an erosive impact on the income of wealthy investors. This makes tax planning an essential service along with retirement planning and investment management.

What makes tax planning an essential service?

  • Tax planning can help save you money by reducing the amounts you owe the IRS and other tax agencies like states, cities, and counties.
  • Tax planning can help you avoid penalties for not paying enough taxes on time or for paying too much in estimated taxes and withholding throughout the year.
  • Tax planning can help keep your personal information safe from hackers who can use the information to benefit themselves.

Effective tax planning can help ensure that you are not audited by the IRS, which is stressful, time-consuming, and expensive if you are represented by a CPA and tax attorney.

Chapter 5

Should I save more or less in my 401k during periods of market volatility?

The answer is simple: always save as much as you can. There is a hidden benefit. When the markets are down you get more shares than when prices are higher. This bodes well for your financial future. 

Plus, saving for retirement in a tax-advantaged account like a 401k or IRA may reduce your taxable income and grows tax-deferred until you start taking distributions. 

So even if the stock market declines 10%-20% you are getting more shares for your money, which will be a major benefit when the markets start rising. 

Read: A 401(k)-to-roth conversion: when it makes sense, and when it doesn’t


Chapter 6

Pros and cons of Roth IRA conversion in Texas

roth ira you are interested in increasing your tax-free income during retirement, then a Roth IRA conversion is a tax-free way to do so. However, it is important to understand that Roth IRA conversions are subject to income tax and not the 10% early withdrawal penalty. This means that any amount that you convert from the traditional IRA account into the Roth IRA will be taxable for the year that this occurred.

Roth IRAs have several important tax characteristics:

  • Contributions are taxable
  • Assets grow tax-free inside the accounts
  • Withdrawals from the accounts are tax-free
  • There are no Required Minimum Distributions (RMDs)
Chapter 7

Managing your taxes with the help of a San Antonio, TX financial advisor

The tax laws are not always straightforward and can be confusing for people who do not rely on professional advice and services in San Antonio. They can also change from year to year, so it's important to have someone who is keeping up with all of the changes in order to advise you on current regulations.

The San Antonio, TX financial advisors at PAX will work with you to:

  • Help minimize your income tax liability by using deductions and credits when available under current laws and regulations
  • Save money on property taxes by considering a refinance or an installment sale of your property
  • Plan for retirement by contributing to a 401k, IRA, or other types of accounts that have tax advantages. For example, a Health Savings Account


Chapter 8

Do you need a Texas financial advisor or an accountant?

Many people are confused about some of the overlapping roles of financial advisors and accountants. Accountants are great at bookkeeping functions and tax preparation, but most of them are not trained to provide financial planning and investment advice. Financial advisors, on the other hand, can provide planning, investing, risk, and tax advice.  

Many financial advisors have gone through rigorous training in order to learn how to help people plan their futures while growing and preserving their wealth. As a result, they're able to offer advice based on years of experience working with clients just like you. 

The right financial advisor will be able to work with your accountant and/or attorney who produces your legal documents. In fact, the advisor can coordinate advice between professionals to minimize conflicting advice and duplicate fees.

Financial advisors at PAX can help you with our Pivot Retirement Planning service to make sure that you're saving enough to move into the next chapter of your life. This is one of the most important things you can do when it comes to planning your financial future. A good advisor will help make sure this happens by making recommendations based on your current situation (how much income you earn now and in the future), goals (when would you like to retire), risk tolerance level, and other factors related specifically to the achievement of your retirement goals.

Chapter 9

Timing your income to maximize your tax savings

tax mitigation you're like most people, you've probably heard you can never have too much money saved for retirement. How you accumulate retirement assets can have several tax benefits. Sure, it can seem a little tedious saving year in and year out—but if done correctly, tax planning can help you save thousands of dollars on your taxes every year. 

Read these five tips you should keep in mind:

  1. Maximize your deductions. Every dollar counts at tax time—and that includes the money saved by taking advantage of deductions. Whether it's home-related expenses or medical bills (including dental), maximizing these will reduce your tax bill at the end of the year.
  2. Take advantage of tax credits whenever possible. While deductions reduce the amount of taxable income, lowering the amount on which you pay taxes overall; credits directly reduce your total tax bill on a dollar-for-dollar basis.
  3. Prudently manage income and expenses so that you have more room under each bracket's threshold limits.
  4. Convert taxable income into long-term capital gains whenever possible because capital gains rates are usually lower than ordinary income rates.
  5. Adjust contributions to qualified retirement accounts such as IRAs so they correspond with average annual earnings over several years—this way no more or less is contributed to maximize benefits during each year. 

Maximize your Social Security benefits based on your need for income. This means deferring your start date as long as you can. On the other hand, if you need the income start taking it when you need it. 

Social Security benefits can reduce your need to make withdrawals from other accounts. Consequently, your assets that produce income will last that much longer. Current health and family history for longevity should be factored into your timing.

Chapter 10

Working with a San Antonio Financial Advisor for tax planning

texas financial advisor PAX, tax planning will be tailored to your specific needs and goals. An experienced financial advisor will help you evaluate your options and make better decisions that are in line with your timelines and goals. The PAX professionals can also assist with other areas of personal finance such as:

Avoid the most common tax planning mistakes in Texas

While it’s important to optimize your tax situation, you should avoid making these mistakes:

  • Ignoring opportunities to shelter income in retirement accounts
  • Not taking advantage of the capital gains exclusion on home sales
  • Not maximizing RMDs from IRAs

When it comes to your taxes, the one thing you don't want to do is pay more than you have to. When you think about tax planning in San Antonio, it's not just about minimizing your tax burden; it's also about maximizing your tax savings.

If you're looking for a way to minimize your future tax burden and maximize your current savings, look no further than comprehensive financial planning. A qualified financial planner can help by providing a holistic view of all aspects of both your finances and life goals so that you can make informed decisions that align with both personal values and business goals.

Read: 3 Ways To Integrate Your Faith With Your Finances

Chapter 11

Strategies for optimizing RMDs from IRAs

RMDs are required so you must start taking distributions by a particular date. The government wants its tax money. At the same time, the longer you wait to take distributions, the more time your assets have to accumulate on a tax-deferred basis.   However, other regulations also come into play if you die before reaching age 59½ because there are tax penalties associated with not having taken proper RMDs during your life; this is known as an "excess accumulation" penalty.

In order to avoid these types of penalties, many people choose to invest their retirement funds into IRAs rather than 401Ks or other employer-sponsored plans simply because they can earn more interest on their money over time without having it taxed annually like investments in other types of accounts. 

The downside though is that there are additional withdrawals required once someone turns 70½ years old; this means they must take extra steps toward planning ahead so that no extra taxes are paid after death—something which could make a significant difference between retiring comfortably and struggling later in life!

Chapter 12

How to structure your portfolio to lower your taxes, with the help of San Antonio, TX financial advisor

How good do you feel about your current portfolio? Taxes can be confusing when selecting individual investments that will make up your portfolio. There are so many different rules, and it's hard to know which ones apply to you. But the good news is that there are plenty of ways for you to lower your tax burden by taking advantage of the best tax-related practices.

Taxes can be tricky, but with the help of an advisor at PAX, you'll be able to save on taxes and achieve your financial goals at the same time!

When it comes to tax planning, your experienced advisor can help you develop the right strategy for you. If you're retired and seeking some extra income, ask us about using a Roth IRA conversion. This will help you take full advantage of your tax-free earnings while still allowing contributions into a traditional IRA account so that there are funds available when needed later on in life (including retirement).

If you’re ready to get help with your finances and put a comprehensive plan in place, contact us for an introductory call to see how PAX Financial Group can help.

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This material is provided by PAX Financial Group, LLC. The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. The information herein has been derived from sources believed to be accurate. Please note: Biblically Responsible Investing (“BRI”) involves, among other things, screening for companies that fit within the goal of investing in companies aligned with biblical values. Such screens may serve to reduce the pool of high performing companies considered for investment. Investing involves risk. BRI investing does not guarantee a favorable investment outcome. PAX Financial Group has conducted due diligence for their Biblically Responsible Investing (BRI) process and proudly serves as each client’s advocate using fully vetted third-party specialists for the administration of BRI methodology. Past performance is no guarantee of future results. Investments will fluctuate and when redeemed may be worth more or less than when originally invested. This information should not be construed as investment, tax, or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product and should not be relied upon as such.

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