Tax Planning From a Financial Tax Advisor in Texas
Most people looking for a financial tax advisor are already weighing a financial decision and want to understand the tax consequences before they act.
That might mean deciding whether to convert to a Roth, which retirement account to use first, or how Social Security may affect their taxes.
Nexus One is an SEC-registered investment advisor based in Plano, Texas. As a fiduciary, we’re obligated to put your best interests first. We build tax planning into your financial plan so the tax impact is considered as part of the decision, not dealt with separately afterward.
What a Financial Tax Advisor Does
Tax planning and tax advice are not the same service. Nexus One considers taxes as part of your financial plan, but we don’t prepare returns or provide tax advice for your individual situation.
Tax Planning at Nexus One
We consider those effects as part of your broader financial plan, before decisions are made.
Tax Advice From a Tax Professional
If you’re looking for a financial tax advisor, it’s important to understand which type of help you need. Nexus One works alongside your tax professional, not instead of them.
Tax Planning for Texas Residents
Where you live affects the tax side of your financial plan. A financial tax advisor who understands Texas can plan around the taxes you actually face.
Texas has no personal state income tax. In retirement, that means withdrawals from tax-deferred accounts aren’t taxed again at the state level as they would be in many other states.
Property taxes play a larger role instead. They are set and collected locally, and qualifying homeowners may receive residence homestead exemptions that reduce the taxable value of their home.
Those differences can affect real financial decisions. A Roth conversion, the timing of a property sale, or a decision about where to retire can look different for someone in Plano than for someone living in a state with an income tax.
Where Tax Planning Fits in Your Financial Plan
Tax planning affects many of the same financial decisions you’re already making. A financial tax advisor considers the tax consequences while those decisions are still being made, rather than treating taxes as a separate step afterward.
Retirement Account Withdrawals
Which account you draw from first can affect what you keep. Taxable, tax-deferred, and tax-free accounts behave differently, and the order of your withdrawals can change your tax bracket from one year to the next.
Roth Conversions
A Roth conversion means paying tax now rather than later. Whether that makes sense depends on your tax bracket today, what you expect it to be in the future, and how the additional income affects the rest of that year.
Social Security Timing
How much of your Social Security is taxable depends on your other income. That makes the timing of your benefits a tax decision as well as an income decision.
Medicare Premiums
Higher income can increase what you pay for Medicare. Because those premiums are based on income from a prior year, a one-time increase from a conversion or property sale can affect what you pay later.
Required Minimum Distributions
Required minimum distributions eventually require withdrawals from tax-deferred accounts, and the starting age depends on when you were born. The years before those withdrawals begin are often when there is more room to plan.
Estate and Gifting Decisions
How assets are held and who inherits them can affect the tax treatment for the people who receive them. Those considerations belong in the plan while you’re making estate and gifting decisions, not after they’ve already been made.
Investment Tax Planning and Your Portfolio
An investment tax advisor looks at your portfolio and your tax position together. Where you hold an investment and when you sell it can both affect what you keep after taxes.
Asset location is one part of that planning. Holding the same investments in different account types can change your after-tax return without changing the investment strategy itself.
Timing matters too. Realizing a gain in a high-income year can cost more than realizing it in a lower-income year, and losses can sometimes offset gains elsewhere in the portfolio.
Taxes shouldn’t drive an investment decision on their own. A financial tax advisor weighs the tax consequence against what the portfolio actually needs to do.
What We Consider in Tax Planning
Tax planning starts with understanding the financial decision you’re considering and what else it could affect. A financial tax advisor looks at the relevant parts of your finances together, then identifies anything that should be reviewed with your tax professional.
What We’ll Look At
The decision you’re considering
A Roth conversion, retirement withdrawal, property sale, business exit, or another financial move
Your income
What you earn now and any changes you expect
Your accounts and investments
Where your money is held and how the decision may affect it
Your retirement income
Social Security, pensions, withdrawals, and other income sources
The timing
Whether making the decision now or later could affect the rest of your financial plan
Your tax professional
Any questions or decisions you should review with them before moving forward
Tax planning also needs to stay current. We review your plan at least twice a year and more often when something changes.
Working With Tax Planners and Your Tax Professional
Good tax planners don’t work in isolation. Planning works better when a financial tax advisor looking ahead at your tax decisions and the person preparing your return work from the same information.
In practice, we’ll flag financial decisions worth discussing with your CPA before you act. We’ll also want to understand what your existing tax return shows.
A conversion, a large gain, or a change in income is easier to plan for before it happens than to address afterward.
If your tax professional wants to be involved in the planning conversation, we can work together so both sides have the information they need.
FAQs About Working With a Financial Tax Advisor
If you’re considering a financial tax advisor, you may want to understand what the role includes, how it differs from working with a CPA, and when tax planning can help. Some of the most common questions we hear include:
What does a financial tax advisor do?
A financial tax advisor helps you consider the tax consequences of financial decisions before you make them.
That can include withdrawal order, Roth conversions, Social Security timing, Medicare costs, investment decisions, and estate planning. The work looks ahead rather than preparing and filing a tax return after the fact.
Does Nexus One prepare tax returns or give tax advice?
No. Nexus One doesn’t prepare tax returns or provide tax advice for your individual situation.
We include tax planning in the broader financial planning process and work alongside your CPA or tax professional. For specific tax advice, you should speak with a qualified tax professional.
Will I still need a CPA if I work with Nexus One?
In most cases, yes. Your CPA or enrolled agent handles the filing itself. A financial tax advisor helps plan for the financial decisions that may eventually show up on it.
The two roles complement each other, especially when both are working from the same information.
How does living in Texas affect tax planning?
Texas has no personal state income tax, so retirement withdrawals aren’t taxed again at the state level.
Property taxes are set locally and can represent a larger part of the picture. Qualifying homeowners may also receive residence homestead exemptions.
Those factors can affect decisions such as a Roth conversion or property sale.
When should I start tax planning?
Ideally, before you make the financial decision.
Many planning opportunities have deadlines, and your options may become more limited once a conversion has been completed or a property has been sold.
If you’re considering a significant financial move this year, that’s a good time to discuss it with a financial tax advisor.
How are your fees structured?
Investment management is typically charged as a percentage of assets under management.
Planning work may be charged as a flat fee or on a project basis, depending on what you need. We explain all costs before you commit.