Be Insightful – Putting taxes into perspective


Kim Ciccarelli Kantor, CFP® CAP™

The IRS will see flow through its doors, or its computers, nearly 150 million tax returns. More than 50 systems are needed to process these tax returns that are based on reporting what occurred and how much we owe.

It’s been vague to us why we label this filing as a “return” when the funds didn’t originate with the IRS. This connotation has no resemblance to the retail world, of course where items are returned for cash or store credit. The IRS lives in a different world…..a phrase used often regards our ability to control many things, but death and taxes. We can, however, play a significant role in the outcome of both of these. A difference can be made if you plan wisely before you are upon either of them.

With 90% of the IRS operations closed during the shutdown, they are in for a very tight timetable to be ready accepting returns by the January 31st announced date. Many Americans who are fortunate to have tangible and intangible invested assets will file much later as tax information is received. Some may defer and elect an automatic six (6) month extension. No one likes to pay the bill, and the bill must be settled by April 15, regardless of when you actually file. This is the not so great part.

What we do love at our firm about tax time is the value you receive if you approach you tax information with an insightful eye. Leave the details to a great accountant for your filing, but know your role is to decipher this information and use it as a planning guide and tool. This is not the role of your CPA and many confuse the two areas of tax preparation and tax planning. “Preparation” reports what occurred, “planning” proposes a specific outcome you are looking to achieve and planning for it well in advance.

Every report-1099s, W-2, 1098, 1041, K-1, schedule C, the list goes on, tells a story. In the compilation of your information, keep a keen eye and then take the time to bring this information into a different light. This period is the most insightful look/see to how you are handling your financial endeavors, and what opportunities for improvement stand before you:

Review your itemized deductions – should you be doubling up on real estate taxes paid into the same year, can your medical expenditures be more effectively directed for improved health or less cost, should charitable gifts be given from stock or your mutual funds rather than cash, would a one time “charitable donor advised fund” provide a tool in a particularly high income year for future gifts you wish to make? Compare your last two years of itemized deductions and determine any trends that need consideration for your cash flow planning.

Review your front page on the 1040. What are the income sources and will there be significant changes in the upcoming year? Is there income from a Trust? If so, review your K-1 with your investment firm to determine the origination of the income and whether it will be consistent in your cash flow.

Determine if tax planning may be accomplished within the Trust.

How will the new tax on investment income effect your liabilities going forward on your dividends and capital gains? Are there distributions received from pensions, annuities or IRAs? If so, is principle being depleted due to these distributions? Is there choices in how this income is received?

What are the spouses surviving benefits should you die? These and many more questions and insights can be stimulated just from an overview of your return at the appropriate time. Best of success in understanding the rich rewards that can follow.

Kim Ciccarelli Kantor

Kim Ciccarelli Kantor, CFP® CAP™ is president

and founder of Ciccarelli Advisory Services Inc., a family

owned and operated firm in Florida and New York, which

provides comprehensive financial investment and estate

planning services for individuals, families and businesses.

Her book is “Preserving Family Wealth and

Peace of Mind.”

Ciccarelli Advisory Services, Inc. is located at 9601

Tamiami Trail North, Naples, FL (239.262.6577239.262.6577)

Investment advisory services offered through Ciccarelli Advisory Services, Inc., a registered investment adviser independent of FSC Securities Corporation. Securities and additional investment advisory services offered through FSC Securities Corporation, member FINRA/SIPC and a registered investment adviser.

The views expressed in this newsletter may not reflect the views of FSC Securities Corporation.

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