Oct 24, 2023
In Episode 22 - Domestic Tax Planning Janathan Allen discusses the importance of the process of domestic tax planning. Many people don't think to consider tax planning by assuming "I'm a W2 employee, how can domestic tax planning help me?" The fact is there are a lot of ways to structure your financial affairs in a way that reduces the amount of tax you owe to the IRS and the State of California (or any state) each year. In this substantive episode, Janathan discusses the concepts of tax planning and how they connect with a transactional plan.
Episode 22 - Domestic Tax Planning goes on to lay out a general outline of domestic tax planning: "The first is what I would call the marshaling of the assets and the marshaling of the assets is really learning about what it is an individual or their individual and a spouse actually hold, earn, and have. So it could be investments in real estate, it could be investments in stocks, it could be investments in fine art or maybe old cars. But it's really sitting down with the client and understanding what it is that they have. Secondarily is what it is and how it is that those assets are held. Because I can't tell you how many times when I ask a client how it is that they hold an asset that that can be an issue in terms of tax planning itself. And then third is the types or the entities that may be utilized or are not being utilized that could go back and effectively save individuals taxes."
Episode 22 - Domestic Tax Planning covers a wide range of topics from pre-tax tools such as a 401k or SEP IRA, FSA, or HSA to the creation of entities to hold specific assets in order to reduce taxation while providing additional protections for the assets themselves. Jan discusses PIGs and PALs and how the use of real estate can be a great domestic tax planning strategy. How long should you keep your tax returns and supporting documentation? What are a few of the "wives' tales" about moving assets and income offshore in order to avoid taxation? What do US expatriates need to know about the responsibility to file an IRS return? How can you avoid the costs and delays of probate and structure your affairs to accomplish all these goals?