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Increasing Taxable Income as a Tax Savings Strategy!

Who’s managing your tax situation? Not a worry? What tax software is your advisor using?

Proactive tax planning throughout the year is the key to reducing taxes and maximizing your wealth accumulation. This is accomplished by applying changing tax laws to your specific situation. Sometimes the most prudent strategy for long term wealth accumulation is actually to generate additional taxable income.

Increasing Taxable Income?

Contrary to the typical advisor, Total Wealth Planning strategies look beyond the current tax year. By doing this, our strategies could include increasing your taxable income to take advantage of the current multi-tiered tax system. Believe it or not, paying little tax or no tax at all could be a very bad idea.

Here’s why:

Continuing to defer income to future years and only focusing on the current year could have the reverse effect and actually push you into a higher tax bracket in the future years. Why is this? At age 70 ½ individuals who have Individual Retirement Accounts (IRA) are required to begin withdrawing from their IRA each based on a provided IRS table. Thus, the growth of an IRA could cause these Required Minimum Distributions (RMD) to be taxed in a higher tax bracket. This can also result in a substantial increase in your yearly Medicare insurance premiums.

If you anticipate higher income tax rates in the future or happen to have low income in a certain year, then increasing income through converting a regular IRA to a Roth IRA, known as a Roth Conversion or accelerating long term capital gains could save you significant taxes in the future.

The tax strategies involved with this type of planning are complex and requires the guidance of a trusted and experienced advisor, such as a fee-only Certified Financial Planner™ (CFP®) and CPA, who plans comprehensively, and with a complete understanding of your particular concerns and goals in life. At Total Wealth Planning we focus on minimizing your tax liability over your lifetime and the next generation’s lifetime.

For more information about the tax planning strategies we utilize, please visit us at or contact directly Rob Lemmons, CFP®, CPA, AIF at 513-984-6696.

Author: Rob Lemmons, CFP® is a principal and director of financial planning at Total Wealth Planning, a fee-only fiduciary financial planning firm in Cincinnati (Blue Ash), Ohio. With over 20 years of experience, Rob oversees every client’s financial planning experience from helping to protect their wealth, corporate benefits, retirement income, and overall wealth transfer strategies. As a CPA, CEPA, and CFP®, Rob is frequently invited to speak on financial planning and tax advisory topics and has been quoted in numerous industry publications including Yahoo finance and the Business Courier. Rob can be reached at

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