tax planningAs fall approaches, the end of another tax year is upon us. California has some of the highest tax rates in, not only the nation, but the entire world. The combined maximum Federal California tax rate for California residents is now 50.3% (This includes California’s 1% mental health services tax on income exceeding $1 Million dollars). California would have the 8th highest tax rate in the world beating Israel, Belgium, and Slovenia which all have a 50% rate, not the record we were hoping for… More can now be going to the government than to you.

Business owners or highly compensated individuals are often not aware of their income and the potential liability until this time of the year. If you are facing an unexpected income tax liability arising from secondary income or the sale of an appreciated asset, we may still be able to help.

A substantial portion of our practice is devoted to planning to minimize income tax while building wealth for families. Different tools are available depending on the amount and type of income received. Some, but not all, planning structures involve charitable components. All charitable structures provide not only charitable benefits and also build substantial wealth for the families. Some structures can provide a dollar for dollar deduction for each dollar contributed, a 100% deduction. Others can provide income to you for life and, if you choose the lives of your children. This can be done and permits you to maintain investment control.

An ideal tax planning candidate has one or more of the characteristics described below:

  • Taxable income of $400,000 or more,
  • Taxable income that is $200,000 more than what is needed for personal consumption,
  • Taxable Capital Gains of $2.0 million or more, or
  • Retirement plan assets in excess of $2.0 million that is nor needed to maintain standard of living.

Tax planning begins with an in-depth analysis of your goals and needs. This process takes time so now is the time to act as we get exceedingly busy at year end.

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