Friday, May 14, 2021

Communication is Key

Ask the CFP

“What we’ve got here is a failure to communicate.”
~ Line from the movie “Cool Hand Luke,” (1967) starring Paul Newman.

Question: Are there any things to consider before year-end that might help with taxes?

Answer: With two months left in 2019, there are a few proactive moves you could consider that may provide tax-savings. Obviously, don’t lose sight of your long-term investment goals, discuss any thoughts with your trusted financial advisor while coordinating with your tax professional before taking action. The last thing you want is an unintended consequence upsetting typical year-end planning.


Fall is a time to gather in the crops. You may benefit from tax-loss harvesting which is to sell losing investments to offset gains. The first $3,000 (single or married filing jointly) offsets ordinary income. Excess losses also can be carried forward to future years. With your advisors, discuss these concepts while trying to decrease your tax bill:

Short-term gains are taxed at a higher marginal rate; aim to reduce those first.

Ask for professional help regarding Wash Sale rules. These are regulations relating to new purchases made before and after the sale of a security used to offset gains. If a security is sold at a loss and a substantially identical security is purchased within 30 days before or after the sale date – the IRS likely will consider that a “wash sale” and disallow the loss deduction. The IRS will look at all your accounts – 401(k), IRA, etc. – when determining if a wash sale occurred.


Monitoring income and deductions may help reduce taxable income prior to year-end.

Donations and gifts to charity can benefit a great cause while possibly reducing your taxable income. Make sure gifts are well-documented.

Deferring income or accelerating deductions could minimize a current tax liability. It may be possible to defer bonuses into a future year, depending on your employer.

Some retirement plans can help to defer taxes. Contributing to a traditional 401(k) allows you to pay income tax only when you withdraw money from the plan in the future, at which point your income and tax rate may be lower or you may have more deductions available to offset the income.

Evaluate your income source mix between earned income, corporate bonds, municipal bonds, qualified dividends, etc. – to reduce the overall tax impact.


No matter how insignificant something may seem, always share it with your team of financial professionals, including your CERTIFIED FINANCIAL PLANNER™ professional. Examples include job changes, retirement, family additions or losses, moving, and any other life adjustments that may impact your circumstances to avoid the dreaded failure to communicate. Here’s a few examples:

  • Moving can have a significant impact on taxes and estate planning, especially when relocating to Florida from a high income tax state or vice versa. Note that moving expenses are no longer deductible as an itemized deduction for non-military members.
  • Modifications in the lives of family members may necessitate revisiting estate planning documents and gifting strategies. Examples include job changes, births, deaths, weddings and divorces can alter dynamics.

Required Minimum Distributions

Be mindful when taking RMDs to ensure compliance of the rules. At age 70½, a required minimum distribution (RMD) is a must by December 31 each year, if not taken, there is a 50% penalty on required amount. Withdrawals prior to age 59½ may also be subject to a 10% federal penalty tax. RMDs are generally subject to federal income tax and may be subject to state taxes. Consult your tax advisor to assess your situation. Raymond James advisors do not provide tax advice.

Consider automating your RMDs to ensure important deadlines aren’t missed.

The first RMD may be delayed until April 1 of the year after you turn 70½. If delayed, the second RMD must be taken in the same year. As a result, your income could be inflated, which may affect your tax-bracket standing.

Subsequent RMDs must be taken no later than December 31 of each calendar year.

Qualified charitable distributions allow traditional IRA owners who transfer RMDs to qualified charities to exclude the amount donated from their adjusted gross incomes, up to $100,000.

Think about how taking distributions will impact your taxable income or tax bracket. If you have space left in your bracket or a down income year, you may want to consider taking additional distributions.


Something as simple as communicating with your team of financial professionals could make all the difference. Consider these to-dos as you prepare to make the most of year-end financial moves:

  • Manage your income and deductions, paying close atten¬tion to your marginal tax bracket.
  • Remember to take your RMD.
  • Evaluate your investments, keeping in mind whether you could benefit from tax-loss harvesting.
  • Make a list of the life changes you and your family have experienced during the year.

Stay focused and plan accordingly.

The data and information contained herein was obtained from sources considered to be reliable, but accuracy and completeness are not guaranteed. This information is not meant as tax or legal advice. For more information on tax rules and other laws, which are complex and subject to change, consult your tax planning and legal professionals. Raymond James and its advisors do not offer tax or legal advice. You should discuss any tax or legal matters with the appropriate professional. Views are as of October 28, 2019 and subject to change based on market conditions and other factors.

“Certified Financial Planner Board of Standards Inc. owns the certification marks CFP®, CERTIFIED FINANCIAL PLANNER™, CFP® (with plaque design) and CFP® (with flame design) in the U.S., which it awards to individuals who successfully complete CFP Board’s initial and ongoing certification requirements.”

This article provided by Darcie Guerin, CFP®, Vice President, Investments & Branch Manager of Raymond James & Associates, Inc. Member New York Stock Exchange/SIPC 606 Bald Eagle Dr. Suite 401, Marco Island, FL 34145. She may be reached at 239-389-1041, email Website:

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