Alliance of Comprehensive Planners Provides Tax Tips That Will Help Save Money

Alliance of Comprehensive Planners Provides Tax Tips That Will Help Save Money

Given the complexity of changes to the tax code, thanks to tax reform legislation passed in 2017, most tax payers are left confused and unsure about how to plan for taxes in the coming year. The new law altered the federal income tax brackets, doubled the standard deduction and changed many other tax credits and deductions, such as for pass-through businesses.

Here are a few tips from members of the Alliance of Comprehensive Planners (ACP) to help tax payers reduce confusion and prepare and structure their finances in order to minimize their tax footprint moving forward for 2019. The ACP is a community of tax-focused financial advisors who provide comprehensive tax and financial planning strategies for their clients on a fee-only (commission-free) retainer basis.

ACP certified member, Steve Cruice, CFP®, CPA, Lead Advisor, Simply Steward, LLC, offers this advice:

·      Identify opportunities to bunch deductions – “With the higher standard deduction enacted from the 2017 Tax Cuts and Jobs Act, it may make sense for people to bunch deductions such as medical expenses, charitable contributions, and certain taxes in one year and take the standard deduction the next, or vice versa,” said Cruice. “This strategy can allow people to get their itemized deductions above the standard deduction in certain years to avoid losing out on these itemized deductions. For a married couple, aged 50, filing jointly in 2019, the standard deduction for this couple is $24,400. Let’s also assume that this couple is in the 24% tax bracket with income of $125,000 per year and pay approximately 6% state income tax. They anticipate the following itemized deductions for 2019: State income taxes and property taxes of: $10,000 (note, there is a cap of $10,000 of itemized taxes under the new tax law); Mortgage interest: $7,000; Charitable contributions: $6,250.

“Based on the above, this couple expects to have itemized deductions of $23,250, which is below the standard deduction of $24,400. Since they will not have itemized deductions that exceed the standard deduction in 2019, what if instead of making their charitable contribution in 2019, they save it and make a contribution on January 1, 2020? Assuming they also give $6,250 in 2020 (on top of the delayed 2019 contribution), they would have itemized deductions in 2020 of $29,500 (taxes of $10,000+mortgage interest of $7,000+charitable contributions of $12,500). By taking the standard deduction in 2019 and shifting, or bunching, two years’ charitable contributions into 2020 they will save approximately $1,530 in federal and state taxes over taking the standard deduction in both years,” added Cruice.

ACP certified member, Jacob D. Kuebler, CFP®, EA, Bluestem Financial Advisors, LLC, suggests the following:

·      Reconsider using Roth-type retirement savings – “Many employer 401(k) and other retirement plans allow for Roth contributions, which means funds go in after-tax (no tax savings now), but grow tax-free and can be spent tax-free in retirement,” said Kuebler. “The newest tax legislation temporarily reduces tax rates for most taxpayers through 2025, at which point rates will revert back to the higher rates. As a result, it might be beneficial to pay tax now through Roth savings and enjoy the growth and use of these funds tax-free later. This may be especially true for business owners who saw a reduction in tax under the new Qualified Business Income (QBI) deduction. Retirement savings by a business owner made into pre-tax (non-Roth) savings may actually reduce the QBI deduction and result in less tax savings,” said Kuebler.

ACP certified member, Alicia Klein, CFP®, EA, Senior Advisor, Cambridge Financial Group, suggests the following:

·      Max out your Health Savings Account – “This is a triple tax-free benefit,” Klein said. “Health Savings Accounts (HSAs) allow you to put money into a savings account to be used for health costs. One, the savings are not subject to payroll taxes (7.65% for those making under $132,900). Two, the savings are not subject to income tax. Three, the distributions are not subject to tax on if used for qualified health costs. Most HSA plans allow for a portion of the money to be invested, as well,” added Klein.

ACP President, Frankie Corrado, CFP®, RLP, Partner, Blue Blaze Financial Advisors, offers this advice:

·      Save for your future, save taxes now – “The US Government is offering incentives for people to save for their future with current tax benefits. This comes through the form of Qualified Retirement Plans – essentially, these are employer-sponsored or personal retirement accounts that taxpayers receive tax relief for contributing to now,” Corrado said. “If you are able to save $5,000 a year into a qualified plan (such as a 401(k), 403(b) or Traditional IRA), the IRS allows you to reduce your taxable income by that amount. And instead of paying taxes on the income and gains in the qualified retirement account, they are deferred out until you begin withdrawing, hopefully in retirement. I highly recommend that all people, no matter your situation, save at least 10% of your annual gross income into a qualified retirement account as a baseline to any good financial planning. The benefits of current year tax relief, long term saving, and tax-deferral will have ‘future you’ really happy that ‘past you’ was thinking ahead!” added Corrado.

·      Charitably inclined? Consider a Donor Advised Fund – “Donor Advised Funds (DAF) are tax efficient ways for people who gift to their favorite charities each year. A DAF is an IRS-approved account that allows taxpayers to contribute appreciated securities and receive a tax deduction for the full fair market value of the security,” Corrado said. “Let’s say you own a stock worth $10,000, but you bought it many years ago for $4,000. Normally, if you sell the stock, you will have to pay Federal and State tax on the gain of $6,000. Depending on your tax bracket and state of residence, the tax on the gain could be quite large (over 30%)! If you instead contribute this appreciated security to a DAF, not only do you avoid paying any tax on the gain, but you also will receive a tax deduction in the amount of the fair market value of the donated stock. This strategy is particularly beneficial for taxpayers who have been impacted by the recent tax law changes and no longer itemize their deductions. With a DAF, you could ‘front load’ future charitable contributions into the current year with a big, upfront contribution of appreciated stock to the account and increase the deductions from income. Of course, you must remember, any money that goes into the DAF can only be used for 501(c)(3) non-profits…not back in your pocket,” said Corrado.

·      Self Employed? Keep the receipts and open a business-only bank account – “I see so many self-employed people co-mingle their personal and business expenses on one credit card or bank account. I advise against this for three main reasons. For one, it makes preparing your tax return time consuming and costly. If you are preparing the tax return yourself, then you have to meticulously go through ALL of your annual expenditures and pick out just the business-related ones. And if you pay an accountant to prepare your taxes, they will most certainly charge you more, if you don’t give them an itemized list of your business only expenses. Second, searching for business expenses within your entire list of bills could lead to you missing expenses that qualify for deduction, which will increase your tax liability. Third, if the IRS were to ever audit you, you will now have to show the government your entire list of expenses – personal and business. For the folks who want the government out of their lives, opening up your expense statements is not the way to go,” said Corrado.

·      Know the rules on capital gains tax – “I often hear people tell me how great they are doing ‘in the market.’ What is funny is that these people only talk about their gains and never about their losses. But when someone tells me that they sold some stock and made a 50% profit, I ask if that is pre- or post-tax. It is almost always a pretax number. When you sell a stock for a gain, remember that you have to pay Federal, State and possibly local tax on that amount. If the gain is ‘short term’ – i.e., the holding period is less than one year – the tax rate on that gain will be whatever your marginal tax rate is. If you are in the top tax bracket, that could be 37%. Add on another 3.8% of Net Investment Income Tax (related to the Affordable Care Act), State Tax (let’s assume 7%), and possible local tax (if you reside in New York City it is 3.8% for top tax brackets), and your big smart investment gain will be reduced by over a half! That will certainly impact your ‘return’ percentage. So remember, your investment skills may be great, but the government always gets their cut. Know the rules and the rates,” added Corrado.

Navigating the new tax laws can be confusing, but by using an experienced guide, such as a member of the ACP, tax payers can prepare for the coming tax year with confidence.


The Alliance of Comprehensive Planners (ACP), is a community of tax-focused financial advisors who provide comprehensive tax and financial planning strategies for their clients on a fee-only (commission-free) retainer basis. ACP members are required to maintain the CFP® or CPA/PFS (or equivalent) designation, complete ACP’s rigorous training program, and meet some of the highest continuing education requirements in the industry. To learn more about this fiduciary network or to find a certified ACP member, visit

The ACP business model, proven methodologies and professional community provide an attractive structure for CPAs, CFPs and other financial professionals who want to serve their clients in a truly holistic, conflict-free manner. In 2018, the ACP announced new categories for joining this fiduciary network of tax-focused, retainer-based financial advisors. A helpful grid that shows costs and benefits for each ACP membership level is shown here:

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Source: Alliance of Comprehensive Planners (ACP)