Lifetime Tax Strategy: Minimizing Your Financial Burden

Tax Planning 101: Strategies For Today And In The Future?

Minimizing your tax burden requires more than just annual filing strategies—it demands a lifetime perspective on wealth management. In today's riveting discussion, we dive deep into the world of comprehensive tax planning that most financial advisors and CPAs simply don't address.

The concept of "tax windows" could transform your financial future. These are specific years when your income situation deviates significantly from your norm—perhaps due to an unexpected bonus, job change, or temporary income reduction. By identifying these windows, we can implement strategic moves like accelerating charitable donations during high-income years or executing Roth conversions during low-income periods. These tactical decisions can save you thousands over your lifetime.

For our younger listeners in their 30s and 40s, we challenge conventional wisdom about tax deductions. While the immediate gratification of tax breaks feels good, we explore why prioritizing Roth contributions and HSAs might actually be your smartest long-term play. With historically favorable current tax rates and the likelihood of increasing income (and potentially tax rates) in your future, building tax-free retirement assets now could be your most powerful wealth-building strategy.

Retirement brings an entirely new tax planning landscape that requires specialized navigation. Those transition years between stopping work and claiming Social Security create golden opportunities for tax optimization that many retirees miss. Remember—you're only newly retired once, and maximizing those early retirement years can dramatically impact your financial security for decades to come.

Ready to transform your approach to taxes? Visit Stansellwealth.com for a complimentary consultation or call 469-606-2040 to start building a tax strategy that works across your entire lifetime, not just until next April.

To learn more about Stansell Wealth Planning visit:
https://www.StansellWealth.com
Stansell Wealth Planning
5550 Granite Pkwy, STE 270
Plano, TX 75024
469-606-2040

Episode Transcript

Speaker 1 (00:04):
Welcome to the Steadfast Wealth Planning
Podcast, where faith andfinancial wisdom come together.
Hosted by Cody Stansel, ownerand senior wealth advisor, we
provide comprehensiveChristian-based financial
planning to help families,individuals and business owners
build a life they're proud tolive.
From investment management andtax planning to preparing for

(00:25):
retirement, we're here to guideyou with clarity, integrity and
purpose.
Let's get started.

Speaker 3 (00:37):
Tax season may come and go, but smart tax planning
lasts a lifetime.
Learn foundational strategiesto minimize liabilities now and
bless your legacy later.
Welcome back everyone.
I'm Sophia Yvette, co-host andproducer, back in the studio
today with Cody Stansel, SeniorWealth Advisor at Steadfast

(00:59):
Wealth Planning.
Cody, how's it going today?

Speaker 2 (01:02):
Good morning Sophia.
I'm doing well.
How are you guys?

Speaker 3 (01:06):
Also doing well here.
Thanks for asking, cody.
Now great to have you back on.
Let's talk about Tax Planning101.
What are some strategies fortoday and in the future?

Speaker 2 (01:19):
Yes, riveting topic taxes.
Doesn't everyone love it?
We do a lot of tax planning forour clients.
It's a passion of mine actually, all joking aside, really is,
of all the services that weprovide besides managing
investments, it's the mostbeneficial topic of someone's
finances in our opinion.
So every client wants to payless in taxes.

(01:42):
I've never met someone that'slike oh yeah, I don't, I don't
care, I'll, I'll pay as much asI can't.
Like no one says that everyonewants to pay less in taxes.
I've never met someone that'slike oh yeah, I don't care, I'll
pay as much as I can.
Like no one says that Everyonewants to save on taxes.
So it's a big topic of ours inour firm.
I come from a tax planningmindset and background.
My first job out of college wasin an accounting department at
a bank.
My mother's an accountant andover my career I've seen how

(02:04):
confusing and complex the taxcode is and how clients would
love someone in their cornerhelping them plan around it.
Full disclosure I'm not a CPA.
I don't claim to be.
This isn't tax advice.
We don't do tax preparation,but we do coordinate with your
CPA, making sure all the T's arecrossed eyes are dotted.

(02:25):
Also, what we found is not alot of CPAs do the planning
piece, right, they look in therearview mirror, mirror, send us
all of your tax information1099s, w2, all that and then
it's a lot of rear view lookinghey, here's your taxes.
Okay, see you next year.
Right, there's not a lot ofplanning for the next five, ten
years down the road, and that'swhere we come in.

(02:47):
So our view on taxes it's alifetime of tax.
So think of your future.
Whether you have 20 years lefton this earth or the lord bless
you 60 years left, whatever yourthe rest of your life, you will
pay income taxes on your income.
That's just how it is.
Death and taxes, only twoguarantees.
How do we lower that overallnumber over your remaining years

(03:10):
of your life?
That's the question that wewant to answer.
Sometimes that means payingmore in taxes today to save down
the road.
Other times it's vice versaSaving today, maybe we'll pay a
little bit more in the future.
But once you stand back andlook at how much taxes that you
owed over your lifetime, let'smake sure that overall number is

(03:33):
as low as it can be.
And when clients come on board,if I meet with someone brand new
and they decide to become aclient, we ask for their last
two years of tax returns, justso we have a better
understanding of where they are.
There's a lot in someone's taxreturn that will give us insight
into their other information intheir financial journey.
So we talked through that aswell and then we practically

(03:58):
talk about is there any bigchanges to your income, any
obvious changes that are goingto be different than compared to
last two years?
You got a new job and yourincome is just a lot higher.
Last two years income Taxreturns are beneficial, but we
obviously got a plan for thisyear and future years.
Maybe you just sold a business.
Income is going to be differentgoing forward.

(04:20):
Maybe you just retired andyou'll have much less income
coming in.
So there's some obviousdifferences for the future
compared to the past.
But the last two years taxreturns definitely give us a
good insight into your financialplan.
So three topics we'll discusstoday.
We may only have time for twoof them.
The last one could be its ownpodcast and we actually probably

(04:42):
will shoot one for its ownpodcast.
But the three topics are arethere any tax windows in your
life?
And what I mean by that I'llget into here in a little bit.
The second one is if you areyounger, recognizing your taxes
will probably go up in thefuture.
Younger, recognizing your taxeswill probably go up in the
future.
Right, your income willprobably go up, and so how do
you plan on that?
Once again, lifetime of taxes.

(05:03):
Recognizing where you are andwhere your income taxes will
probably be down the road helpsyou take advantage of this time
in your life.
And then the third topic thatwe will make its own podcast.
We'll talk a little bit indepth here Tax planning in
retirement.
That's a big one for folks it'sa different ball game and things
change and you've never beenretired before, so you don't

(05:25):
really know.
There's a lot of topics we cantouch on that.
The first two are there any taxwindows in your life?
What I mean by that is arethere any calendar years that
are going to be abnormal incometo you Higher, lower, whatever
it may be?
Once again, your company couldhave paid you a bigger bonus
than you could have everimagined.

(05:46):
You didn't think that was goingto happen, but here you are and
you're in a very high taxbracket for this particular year
.
Right, that's a great year toget as many tax deductions as we
can.
Maybe we need to give to ourchurch or favorite charity more
this year, not so much next year, but let's give more this year
to take advantage of that andget those deductions this year.

(06:07):
On the flip side, maybe youwere just laid off, or usually
you're paid a higher bonus thanyou have been in the past, but
for this year company was slowerand you just weren't paid as
much.
Right, we can take advantage ofthose tax windows as well.
So, prime example okay, let'snot give.

(06:27):
If we're going to give me thelower tax bracket, maybe let's
not give as much to our churchor charity this year.
Let's give it next year.
We'll just take the standarddeduction this year, but let's
get the bigger tax deductionnext year.
And that's just one example.
You can do several things, butit's looking for those tax
windows in your life that youmuch higher than usual, much

(06:47):
lower than usual, and obviouslygo through there.
Another one is if you're in oneof those tax window years
converting some money from yourtraditional 401k or traditional
ira to a roth ira or roth 401ksome people may be aware of this
, some people are not you canmove money from your traditional
401k into your roth 401k oryour traditional ira into a roth

(07:11):
ira.
It's called a roth conversion.
You are converting traditionalIRA money into Roth money.
Why would you do this?
Remember, roth accounts aretax-free when you withdraw them
in retirement.
We want that bucket of money tobe as big as it can be because
it's tax-free money to you.
With Roth conversions, there areno penalties, but you will just

(07:35):
owe regular income tax in theyear that you converted over.
So if you move 20 grand fromyour IRA to your Roth IRA,
you're just going to receive a1099 tax document saying you
have to pay taxes on that$20,000 that you moved over.
Once again, no penalty, justordinary income tax.
So, once again, if you're onein one of those lower years hey,

(07:57):
cody, I was laid off in May,you know, and I'm looking for a
job at nothing, nothing.
Yet we can take advantage ofthat year and hey, that might be
a great year to move some ofthat money in that particular
year when you're in a lowerbracket, right?
So those are just a few topicsthat we want to discuss with
clients is are there obvious taxwindows in your life?

(08:21):
Next topic I want to discuss isif you're younger.
So stay with me here younger,as in, like, in your 40s or
younger.
Okay, I always try to encouragethese type of clients that your
income will probably go up inthe future.
Okay, always make this analogyhow was you know?
What were you earning?
What was your income 10 yearsago compared to today?

(08:44):
You know a lot of people arelike, oh yeah, I was earning a
lot less than it was.
Well, that same methodology 10years from now.
You know, maybe you won't be onthat exact same trajectory, but
it's gonna be the same concept.
You're gonna be probably makinga lot more in 10 years from now
than you are today.
So, recognizing that and okay,I'll probably be making more in

(09:06):
the future.
Also, today, 2025, we're in ahistorically low tax bracket,
tax law environment, like afavorable tax environment.
So who knows what tax law willbe five, ten, twenty years from
now?
You know, could be higher,could be the same, who knows?
But if your income, if you'rein your 30s or 40s, always tell

(09:28):
folks don't worry so much aboutthe tax deductions, let's get as
much tax-free money as we canfor the future.
What I mean by that, you know.
Same analogy contributing to aRoth 401k or a Roth IRA.
Once again, contributing to aRoth, there is no tax benefit

(09:49):
today, right, but that moneygrows and grows and grows is
100% tax-free for you inretirement, right?
So those kind of things.
If you're in the 24% taxbracket or less which most
clients I ask don't even knowwhat tax bracket they're in, so
no shame if you don't either.
But if you're in the 24%bracket or less, we highly
recommend Roth 401ks or RothIRAs.

(10:13):
Also a health savings account,an HSA.
But that's a double bonus.
If you contribute to an HSA,you do get a tax benefit today,
but that money grows and growsand grows and you can take it
out 100% tax-free formedical-related expenses, as the
IRS terms it, in retirement oreven down the road before

(10:35):
retirement or even down the roadbefore retirement.
So, once again, getting as muchmoney into accounts and buckets
that will be tax-free for youfor the rest of your life is
crucial.
When you're in these yearswhere like, yeah, we're making
good money, but you're probablygoing to double your income or
have significantly more incomehere in 10 or 15 years from now,

(10:56):
it's just a big deal.
So that's one, too, that Iencourage those kinds of clients
that really think long-term andnot just saving and taxes.
Today let's think about thelong-term.
And then the last topic.
We'll have a separate podcast onthis one.
It's tax planning andretirement.
But I'll briefly touch on acouple topics.

(11:17):
This is an entirely new world.
You've never been retiredbefore.
You don't really know how itworks out.
There are a lot of tax windowsin retirement.
Cody, I'm retiring at 64, I'mgonna turn on Social Security at
67.
Well, if you, unless you have apension or you own a rental
property that the tenants payyou on the first a month, or you
have an annuity that paystenants pay you on the first of

(11:38):
month, or you have an annuitythat pays you, a lot of those
clients have no kind of earnedincome for those three years,
right?
So, once again, as a financialplanner, I get very excited
because that means your taxwindow is three years long and
your earned income is basicallyzero.
We can do a lot of planningaround that, and so retirement

(11:59):
just offers a unique view intothese planning topics, and
that's why retirement planningis so crucial is because A
clients have never been therebefore.
They don't really know how tonavigate it.
B a lot of those years youdon't get back.
You're only early retirementonce right, and so the benefits
definitely are crucial in thosetime periods.

Speaker 3 (12:21):
Wow, those were some great insights today.

Speaker 2 (12:24):
Too much, too much, not enough.

Speaker 3 (12:27):
Just right.

Speaker 2 (12:29):
Okay, good, that's awesome.

Speaker 3 (12:31):
Grateful, as always, to share this space with you.
Until next time, keep planningwith purpose.
Thanks, sophia.
Until next time, keep planningwith purpose.

Speaker 2 (12:39):
Thanks.

Speaker 1 (12:40):
Sophia, thanks for joining us on the Steadfast
Wealth Planning Podcast.
Ready to take the next step inyour financial journey, visit
steadfastwealthplanningcom for acomplimentary consultation or
call 469-606-2040.
Smart planning Christian values, a life well lived.

(13:02):
We'll see you next time.