Tax Preparation For those clients who need help preparing their individual tax returns, Cabot offers a tax preparation service. This service includes year-long tax planning and the preparation of individual and fiduciary tax returns.The ability to integrate year long financial planning, portfolio management and tax preparation allows us to seamlessly integrate every aspect of our clients’ financial affairs. And, of course, for those clients with their own CPA, we are able to work closely with their tax professionals to help deliver the same level of service and integration. Tax preparation services require a minimum asset level to be maintained with the firm or the payment of an ongoing fee. Cabot reserves the right to limit this service and it may decline to prepare individuals taxes who otherwise meet the required minimums. Tax Planning The goal of tax planning is to arrange your financial affairs so as to minimize your taxes. The key to a successful tax strategy is planning ahead in order to take full advantage of the tax laws. Because we take a wide view of your finances at Cabot, our view of taxes is quite broad. Unlike the disconnect that may exist between your investment advisors and your tax preparer, Cabot unifies these two elements, as well as others, to ensure that your tax liability is minimized. At the core, this involves decisions as to how to best utilize any tax-deferred investment portfolios like 401Ks, IRAs, or Keoghs. Interestingly, few people even consider how they are investing in these portfolios; or worse still, assume that because they are “retirement” portfolios that they must be invested in only the safest investments possible. Further, once an asset allocation strategy is decided upon, it becomes critical to understand where to best locate the allocation among existing accounts. For example, given an individual’s unique situation, the fixed-income component of his or her allocation could best be located within a particular trust or individual account, or there might be reasons why a tax-deferred portfolio should be used. As part of our tax planning process, we also give great consideration to any existing tax-loss carryforwards and how they might be utilized within the present tax year. To ensure that underpayment penalties are avoided, we run tax projections during the year to evaluate an appropriate amount of estimated payments that should be made on a quarterly basis. We also calculate Minimum Required Distributions for retirement accounts, if necessary. Because many clients are business or equity owners, we must initially review the business (C or S Corp., LLC, LLP, etc.) to ensure the best possible balance is achieved between control, taxes, and personal liability. We also offer to measure the impact of exercising Incentive Stock Options in relation to the Alternative Minimum Tax. |
