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Taxes and Your Investments

By Portage County Business Council

By LouAnn Schulfer,  AWMA®, AIF®
Accredited Wealth Management Advisor®

Accredited Investment Fiduciary®

As a Wealth Management Advisor, I help my clients with important decisions, planning and investment management.  While I am not a tax adviser and do not give tax advice, I am mindful of how investment management and income distribution affect my client’s taxes.

I began working with a couple in 2018 who had a complicated portfolio of business ownership and investments.  Reviewing their statements, I found over $69,000 of short-term capital gain had been generated with selling of certain investments.  Fortunately, we were early enough in the year that we could position money into a separately managed account where we could tax-harvest.  We ultimately exceeded our goal of offsetting the short-term gains, which will save them from having to pay taxes at their ordinary income tax rate on that $69,000+.  I called their CPA to inform him of the status of the harvesting and fortunately for the clients, he stated that he will be able to apply the excess to other circumstances they faced in the 2018 tax year.

Years where your income is low can also be opportunities to convert IRA dollars to a ROTH IRA.  I began working with a couple this year who had no taxable income, as they had already retired and were using money from savings to pay their expenses.  We converted a portion of his IRA to a ROTH IRA with no federal taxes due because of the increase in standard deductions in the 2018 tax year.  We caught this opportunity before required distributions began from his IRA.

We talk with clients often about the timing of using funds from various retirement accounts, including their ROTH IRAs.  Most people understand that qualified distributions from a ROTH are not subject to income taxation.  The frosting on the cake, so to speak, is that qualified distributions from a ROTH IRA are also not counted as part of your adjusted gross income.  AGI and Modified AGI are used to determine things like insurance premiums when purchasing health coverage on the exchange, or whether you are subject to Medicare premium surcharges beginning at age 65.

Taxes are complicated and so are investments.  Use the complexity to your advantage if you can, by finding ways for your investments to potentially lower your tax burden.

LouAnn Schulfer is co-owner of Schulfer & Associates, LLC Wealth Management and can be reached at (715) 343-9600 or

Securities and advisory services offered through LPL Financial, a Registered Investment Advisor.  Member FINRA/SIPC.

All investing involves risk including loss of principal.  No strategy assures success or protects against loss.  This is a hypothetical situation based on real life examples. Names and circumstances have been changed. The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investments or strategies may be appropriate for you, consult your financial advisor prior to investing.