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Imagine your investment accounts as a bucket holding your assets, while taxes act like leaks letting those assets escape. Fortunately, there are strategic solutions available to help minimize these tax impacts and preserve a greater portion of your wealth.

Certain states tax income more than others, New Jersey being one of the highest. Beyond understanding your federal and state tax obligations, it’s important to assess whether your investments are subject to capital gains taxation. Many investments are taxed upon sale, with gains potentially classified as either long-term capital gains—if held for more than 12 months—or as ordinary income—if held for less than 12 months. Additionally, capital gains distributions and dividends, such as those from mutual funds, may also be taxable as either long-term capital gains or ordinary income, even if you haven't sold any shares.

There are strategies for managing your tax liability, such as reallocating part of your portfolio into a tax-deferred vehicle.

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Tempewick's Tax Playbook 

As you may know, tax-loss harvesting is when you take capital losses to offset capital gains. While this doesn't eliminate losses, it can help you manage your tax liability.

When you hear the term tax-loss harvesting, you likely think of year-end. As your advisor, I know the importance of a year-round tax-loss harvesting strategy. Midyear is a great time to discuss ways you can minimize your tax liabilities and help maximize your returns with tax-loss harvesting.

You may deduct up to $3,000 of capital losses in excess of capital gains for your federal tax return each year. Any remaining capital losses above that can be carried forward to potentially offset capital gains in following years.

It is important to acknowledge the IRS’s "wash-sale" rule. You can't claim a loss on a security if you buy the same or a "substantially identical" security within 30 days before or after the sale. In other words, you can't just sell a security to rack up a capital loss and then quickly replace it.

Tax-loss harvesting is a year-round strategy for those investors looking to reduce tax liabilities and enhance after-tax returns.

*This strategy may not be suitable for all investors and may have tax implications, including wash sale rules, which could limit the ability to fully realize strategic gains or harvest losses. Investors should consult with a qualified tax professional before implementing any tax-loss harvesting strategy to ensure it aligns with their individual tax situation and investment objectives.

Think you don’t need disability coverage? Think again. We draft a will. Create an estate strategy. And purchase life insurance. But few of us consider disability insurance – the coverage that can help us maintain our income and quality of life while we are alive.

Disability insurance is another important aspect of a holistic insurance strategy. Disability insurance is key during your working years to protect you and your family should something happen that leaves you unable to perform the duties your job requires.

 A fate worse than death? In financial terms, maybe. Statistics from the Social Security Administration show that 25% of Americans in their 20s may become disabled before they reach normal retirement age. Consider this – if you are disabled and cannot work, your income stops, but your expenses may not. In fact, due to the cost of medical treatment, your expenses may even increase.

It may be time to start thinking about disability insurance. The reality is that it could happen to you. If it does, will your family be taken care of? Will you be prepared?