Case Study #1

Pay Less Taxes – Bob & Sarah, Age 50 and 52

The Problem
Bob is a surgeon who makes more than $400,000 per year while Sarah is active in the community through several non-profit organizations. Bob works long hours and does not have enough time to manage their finances with a view towards reducing taxes and creating a long-term plan for retirement. Sarah gets anxious about the large quarterly tax estimates that seem to always come up when cash is low, and worries that Bod does not have time to manage their finances and she doesn’t want him to worry about it or have it take up his minimal free time. Bob knows they pay a lot in taxes and feels like he is missing out on strategies that could save him money and/or better manage his tax burden.

He has tried to talk to his CPA about tax strategies, but the few he has heard about require paperwork, have certain deadlines, and require additional time he does not have.

The Solution
HCO Private Wealth did a comprehensive review of Bob & Sarah’s finances and their last several years of tax returns. The end result was simple summary of the top five strategies that HCO could implement for Bob & Sarah in the current tax year, with HCO handling all the paperwork and keeping their CPA in the loop. HCO also provided a two-page summary of 17+ potential tax strategies Bob and Sarah could think about incorporating in the years to come. HCO will perform an annual tax review each May, to keep adding strategies and ensure that the tax plan stays current with any changes to the tax code. Possible strategies include:

  • Automating quarterly tax payments with a monthly budgeted amount and deferring the task of making payments to HCO
  • Back-door Roth IRAs
  • Cash balance income shelters
  • Charitable giving through a donor advised fund
  • Saving up for the purchase of tax credits every year
  • Side-Gig income shelters
  • Tax loss harvesting
  • Location optimization strategy that moved tax inefficient investments into tax deferred and tax-free accounts thereby reducing taxable investment income

HCO helped Bob & Sarah save thousands of dollars in future taxes. They now enjoy the peace of mind that comes with a clear tax planning strategy and know HCO will ensure they are not paying more than they should. They now have more energy and mental space to focus on what they enjoy.

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