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The 12 Tax-Planning Tips of Christmas

Give your clients the gift of a happier tax season.

It’s the holidays and people are hustling and bustling—trimming the tree, checking off shopping lists, wrapping gifts and celebrating with loved ones. It’s unlikely that many will be thinking about taxes, even though now is the perfect time for advisors to take a look at their clients’ financial strategies to help minimize tax liabilities and give them the gift of a lower tax bill in 2020 for their 2019 tax returns.

Taking time to help clients work through a tax-planning list, and checking it twice, could help correct tax inefficiencies and minimize tax liabilities before the end of the year. Additionally, savvy financial planners may spot opportunities to explore new solutions like life insurance and tax-deferred annuities, which offer the potential to gain even more control over taxes, including the ability to tap the cash value of an insurance policy tax-free or defer taxation on income from an annuity until the income is needed and at a time the retiree will likely be in a lower tax bracket.

Thanks to many changes that came with the Tax Cuts and Jobs Act (TCJA) two years ago, the time-honored strategy of postponing income and accelerating deductions as the first line of defense against high tax bills may no longer make sense for many taxpayers.

But there are still many ways for taxpayers to be tax-efficient. This holiday season, help give your clients the gift of a happier tax season by sitting down with them to review strategies to reduce taxes and improve the tax efficiency of their portfolio. Here are 12 tips to consider before year-end:

Brandon Buckingham is Vice President, Advanced Marketing at Prudential Financial.


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