The hardest thing in the world to understand is the income tax.  

 -Albert Einstein 

Taxes are a difficult topic to discuss in a general way.  So much about tax planning is specific to your portfolio, your income bracket and your ultimate goals.       

Tax efficient investment management is interpreted as using a variety of methods and planning so the client pays the lowest level of taxes on their portfolio while also accomplishing their long term investment goals.  Tax planning tactics include:        

1.   Investing in tax-exempt municipal bonds versus corporate bonds if a client’s income bracket is high.
   
   
2. Avoiding tax-exempt municipal bonds whose interest payments are subject to Alternative Minimum Tax. 
   
   
3. Avoiding short-term capital gains when possible. Short term gains are taxed at the same rate as ordinary income.
   
   
4. Harvesting short-term capital losses to offset against other short-term or long term capital gains.
   
   
5. Realizing long-term capital losses as appropriate. Long-term capital losses can be carried forward to be used to offset capital gains in future tax years.
   
   
6. Realizing long-term capital gains when it is deemed beneficial to the client – for instance, when capital gain taxes are expected to be significantly higher in future years.
   
   
7. Appropriate placement of higher income generating securities in tax-deferred or tax free accounts, e.g. IRAs or Roth IRAs.
   
   
8. Minimizing withdrawals from IRA accounts to continue to defer taxes.

 At Holt-Smith Advisors we employ these various tactics and more to aid our clients with their tax obligations.  We keep detailed records regarding your securities tax lots so we can pick and choose the most tax advantageous methods.  We also work closely with our clients’ tax advisors to ensure their investment portfolios are in alignment with their after-tax goals.  Our clients are not just another account to us.  Our investment specialists know and understand a client’s unique tax situation.