Tax Planning for Investments

I stopped investing in index funds this year Instead, I started "direct indexing": I use an app to automatically buy every single company in the index individually My results: - Up almost 20% for the year (same as an index fund) - More than $70K in tax savings Here's how it works: - The app buys all 500 companies in the S&P 500 in the same proportion as an index fund - Since I have more positions, I have more volatility and more tax losses that it can harvest for me automatically - Even when the stock market is up (like this year), the algorithm automatically sells my losing positions to book me tax losses while tracking the index My results this year: - I'm up almost 20% for the year in asset value (same as an index fund) - I've booked $140K+ of losses along the way. At my tax bracket, that's more than $70K in tax savings - Meanwhile, I've tracked the index all along - my tracking error is +0.2% (in my favor). Things to watch out for: - This only makes sense once you have more than 6-figures invested in the market, as the additional tax savings may not be worth the complexity. - This works best when you keep investing into the market. If you lump sum only one time, the algorithm will eventually run out of losses to harvest. I also wrote a longer guide breaking down how direct indexing works works, which provider I use, pros and cons of this approach, reporting this on your taxes and more. Comment DI and I'll DM it to you!

Most Family Offices don’t lose wealth by making poor investment decisions—they lose it through inefficiencies. Taxes, fees, and outdated structures quietly erode returns, often without investors realizing it. The most sophisticated Family Offices have figured this out. Instead of focusing solely on higher returns, they prioritize something far more impactful: Structural Alpha. This isn’t about choosing the best hedge fund or private equity deal. Structural Alpha is about optimizing how investments are structured to maximize after-tax returns and eliminate inefficiencies. It’s a way to achieve stronger outcomes not by taking on additional risk but by being more strategic about how capital is deployed. A prime example is Private Placement Life Insurance (PPLI), a tax-efficient structure that allows Family Offices to significantly reduce the tax burden on investments like credit funds. Without it, returns on a credit strategy might shrink from ten percent to seven percent after taxes. With PPLI, those gains can be preserved for a fraction of the cost. Another example is tax-aware investing. Tax-loss harvesting extends far beyond its original application, allowing Family Offices to structure portfolios in a way that minimizes tax liabilities without compromising performance. For Family Offices, this isn’t just an advantage—it’s an essential approach to wealth management. Family Offices exist to preserve and grow generational wealth, yet many still operate within traditional investment frameworks that leave money on the table. By integrating Structural Alpha strategies, they can improve after-tax returns without taking on unnecessary risk, reduce compounding inefficiencies, and ensure long-term capital preservation through smarter structuring. The most forward-thinking Family Offices aren’t just searching for strong investments—they’re refining how they invest. Structural Alpha isn’t a trend; it’s a shift in approach that separates those who quietly optimize their wealth from those who unknowingly give a portion of it away.

Investment hates uncertainty—when tax rules change, investments change with them.   And a recent survey shows that this is particularly true in the energy sector   Last week, the American Council on Renewable Energy (ACORE) released their “Tax Stability for Energy Dominance” report which surveyed clean energy investors and developers representing over $15 billion in investments.   The good news is most investors expect to increase their investments over the next three years if there are no policy modifications to federal energy tax credits. This makes sense. Energy demand is rising, project costs are stable, and domestic clean energy supply chains are building out rapidly.   However, if tax policy shifts, investors will drift.   The ACORE survey finds that if tax credits go away or uncertainty is injected into markets, 84% of investors and 73% of developers anticipate decreasing their activity in clean energy.   And of course, this makes sense too. The deals, contracts, and investments that these investors planned were built on the expectation of stable policy. When that policy is changed, investors and developers will reconsider their actions.   To be blunt, America cannot afford to undercut clean energy’s momentum right now.   We are facing the largest increase in energy demand since World War 2, and we need every electron on our grid to meet this challenge. Pulling the rug out from under these projects will only reduce investment, destroy jobs, and raise energy costs.   Read more from this timely survey: https://lnkd.in/exzbR6Xy

Most people see a down market and worry about their retirement But sometimes a falling market could create a tax planning window. Here’s why. First, a quick refresher on Traditional IRAs Many people end up with a Traditional IRA after rolling over an old 401(k). The key features: • Contributions are pre-tax • Growth is tax-deferred • Withdrawals are taxed as ordinary income That means Uncle Sam gets paid later. But there’s a strategy that can change that. Enter: The Roth Conversion A Roth Conversion moves money from a pre-tax account (Traditional IRA) to a post-tax account (Roth IRA). You pay taxes on the amount converted today. In exchange: • Future growth can become tax-free • Withdrawals in retirement can be tax-free • No early withdrawal penalty applies to the conversion itself The goal is simple: Pay taxes now to potentially reduce taxes later. Now here’s where down markets get interesting. Let’s say Bob has: $100,000 in a Traditional IRA. Bob considers converting half. Normally that would mean converting: $50,000 → and paying taxes on $50,000. But then the market drops. Bob’s IRA falls from $100,000 to $50,000. Now when he converts half, he converts: $25,000 instead of $50,000. Meaning: • Smaller conversion • Smaller tax bill But here’s the interesting part. If the market later rebounds back to $100,000 total: Bob could end up with: • $50,000 in a Traditional IRA • $50,000 in a Roth IRA Same overall balance. Except now half of the money sits in a tax-free account. That’s the hidden opportunity. A down market can allow you to: Convert more shares While paying taxes on less money. But there’s a catch. Roth conversions are taxable income. So before doing this, you need to consider: • Do you have cash available to pay the tax? • Are your current tax rates lower than future tax rates? • Will the conversion push you into a higher bracket? Because sometimes the best move is not converting. The real takeaway Market declines feel painful. But sometimes they open up planning opportunities. One of the biggest: Paying taxes on a temporarily lower portfolio value. For the right person, in the right tax situation, that can create meaningful tax-free wealth later. Not tax advice. Just an example of how strategy can sometimes turn volatility into opportunity.

“We had no idea this is what a financial planner did. We thought they just helped on investments. If we did, we would have started working with you a lot earlier” This a common thing we hear and a huge reason why I create content and show what we do So to make it even more tangible for you, I am going to walk you through what are we doing for our clients in our fall reviews Here’s exactly what we go through for every client: Tax Planning We get every clients' most up to date paystubs, P&L, and any other documents to understand where they are at for the year. We then help map out taxes and what tax planning moves need to be made. This could be paying more or less in salary to maximize QBI. This could be increasing contributions to their 401k, HSA, etc to get it maxed out, etc. (as well as use 529 plan in this calendar year for the people it fits for) Then we go through investment accounts and look for tax loss harvesting opportunities, donor advise fund moves, etc. We also look and see if implementing Roth conversions and optimizing tax brackets makes sense before year end. Company benefits We review every clients’ company benefits guide and help them maximize these benefits. This means we analyze both spouses health insurance options and help them select the best plan or mix of plans for them. We then help them decide on if they should use their HSA, FSA, etc. and how much to put it in it. Other areas we look at within company benefits: disability insurance, life insurance (only rarely use), Dependent Care FSA, legal benefits, dental, vision, etc. Note: this is for employees. Business owners we evaluate private insurance, ACA plans, etc for them plus all the other insurances above. Insurance Planning We get every clients homeowners/renters, auto, and umbrella declaration pages to make sure they are properly covered. Then we help them go make the changes needed to be properly protected. We also look at external life insurance and disability insurance make sure they have the proper amount for their life and their family. Estate Planning Sometimes things change: relationships change, you want new appointed guardians, maybe you move, you had more kids, you may need to add a trust, etc. and that leads to needing an update of your plan. For clients who have not gotten it done, we either refer them to an attorney and help setup the meeting or we get them into Wealth.com to go get their plan done. They also can hire an attorney through Wealth. Staying on top of this is crucial Life changes Lastly, our team reaches out a few weeks ahead of time to make sure we get their agenda. We don’t want to just throw our agenda on everyone and avoid what they are going through. It is crucial to focus on what our clients really need and want help on while also getting the yearly important review parts done. This is what a great fall review looks like for our clients. We have found this adds a ton of value for them and their lives.

This summer, a single vote in Congress rewrote the playbook for America’s wealthiest families. With the passage of the “One Big Beautiful Bill,” sweeping estate law changes and expanded exemptions are forcing Family Offices to take a hard look at their future. For years, estate planning has often been treated as a technical exercise in tax efficiency. But 2025 feels different. What we’re seeing at Family Office Access is not just paperwork shifting from one folder to another. Families are reimagining what to do with farmland, private operating companies, and philanthropic vehicles that carry their values into the next generation. The numbers tell the story. Early 2025 surveys show that more than half of single-family offices are revisiting legacy structures this year. Our analytics show a 30% increase in inquiries about estate transition strategies in our client network. UBS and Campden Wealth reports confirm the same global trend: succession planning and governance now rank alongside direct investing as top priorities for Family Offices. The OBBA has become a catalyst. Families are asking harder questions around mission, continuity, and the role of capital in shaping long-term legacy. Farmland is being treated as a commitment to sustainability. Operating businesses are being restructured with generational leadership in mind. Philanthropic vehicles are moving toward impact models designed to outlast their founders. Aviation, surprisingly, has also become part of the conversation. Buried in the bill is a generous incentive that allows private aircraft to be written into estate structures with favorable treatment. For some families, this means jets can be transitioned across generations with reduced tax friction. For others, it opens the door to structuring ownership through trusts or family partnerships, turning what was once viewed purely as a lifestyle expense into an asset that supports both mobility and long-term planning. This moment extends well beyond tax mechanics. Families are navigating generational purpose and deciding whether these changes will create opportunity or present new burdens. Do you believe the OBBA will ultimately benefit or hurt Family Offices? And beyond families themselves, what ripple effects will these changes create across the broader business world?

Most founders will hand the IRS millions at exit. Not because they have to. Because they didn’t plan. Here’s what Qualified Small Business Stock (QSBS) changes: Section 1202 allows founders to exclude up to $10M in capital gains from federal taxes when selling qualified stock. Zero tax on: - Capital gains - Net Investment Income Tax (3.8%) - Alternative Minimum Tax But here’s the catch most founders miss: You need to file an 83(b) election WITHIN 30 DAYS of receiving restricted stock. This starts your 5-year holding period clock immediately, even before your shares vest. Miss this deadline, and you could lose millions in tax savings. The 3 critical requirements: → Your company must be a domestic C-Corp → You must hold the stock for 5 years minimum → Gross assets under $50M at issuance ($75M for stock issued after July 4, 2025) Example: A founder with a $2M basis could potentially exclude up to $20M in gains (the greater of $10M or 10x your basis). Always work with your Tax Advisor! Are you planning your exit strategy with QSBS in mind?

You can withdraw ₹12 lakh per year from mutual funds and pay zero tax. This isn’t a hack or a jugaad. Let me explain. The first thing most people think about when it comes to withdrawal is SWP. But you’re wrong. Here’s IDCW- IDCW stands for Income Distribution cum Capital Withdrawal. IDCW is added to your total income and taxed as per slab. So if your total income (including IDCW) stays within ₹12 lakh, there’s no tax payable under the new tax regime. This makes IDCW surprisingly useful in low-income years — retirement, sabbaticals, or transition phases. SWP stands for Systematic Withdrawal Plan. With SWP, only the capital gains portion is taxed. But equity capital gains are tax-free only up to ₹1.25 lakh per year. Beyond that, tax kicks in. SWP works better when you already have salary, rental or business income and fall in higher slabs. The real takeaway There’s no “better” option between IDCW and SWP. • Low-income years → IDCW • High-income years → SWP Same fund. Same corpus. Smarter withdrawals = higher post-tax returns. This is where real wealth planning begins — not at fund selection, but at exit planning. ⸻ If you want help designing a tax-efficient income strategy, DM me or comment “PLAN” and I will reach out to you. Alternatively you can also reach out at partha@advisoira.com or visit www.advisoira.com

Since it's the tax season, it's time for a retrospective. A few years ago, I had a wake-up call. While filing returns, I discovered I owed extra tax — over and above the TDS already cut. Paying that out of my pocket made me uneasy. But more than the money, it made me realize I was missing something in how I managed my finances. That moment became one of the most important triggers that pushed me into self-exploration and my FIRE journey. When I dug deeper, two things stood out as silent tax traps: 1. Fixed Deposit (FD) Interest — stable, yes, but taxed heavily as per your slab. 2. Dividend Income — looks nice when credited, but every payout adds to your tax bill and complicates filing. That’s when I began restructuring. I started dissolving old FDs (though some 5-year lock-ins still linger) and thinking about my entire investment approach. Here's are some conclusions I came to. 1. Keep FDs Minimal FDs are convenient but highly tax-inefficient. My three pain points with FDs today: - You pay tax even if you don’t withdraw the money. In debt funds, tax applies only to the redeemed amount, not the entire corpus growth. - FDs mature and must be reinvested, often manually to get the best rates. - Whatever tax I pay on FDs is arbitrage lost — in MFs, that same money continues compounding. If I don’t redeem in a given year, I pay zero tax even if the corpus grows 6–7%. Debt mutual funds can be a smarter alternative for emergency funds or stable cash flow. They’re flexible, and the taxation works differently, often favoring long-term holding. 2. Choose “Direct Growth” Mutual Funds Instead of holding stocks that keep throwing off taxable dividends (that you don't really need as a salaried, actively earning member), direct growth equity MFs reinvest dividends back into the fund. This way, I don’t get taxed yearly, and my money compounds silently until redemption. 3. Play the Long Game Short-term “kicks” (like dividends or FD interest hitting the account) feel good, but they don’t always serve the bigger goals. Long-term growth through tax-efficient instruments compounds both wealth and peace of mind. My Goals Going Forward 1. Reduce FD exposure to the bare minimum. 2. Shift more individual dividends providing stock allocations into growth MFs to minimize dividend-related tax. Looking back, paying that unexpected tax was frustrating. But in hindsight, it was the best trigger. It forced me to optimize. Taxes are not just bills, they’re signals. They show us where our money structure is inefficient. And if we pay attention, they guide us toward smarter, leaner, and more future-proof investing. Disclaimer: Views are purely shared for educational purposes. Please do your own due diligence and/or consult your tax advisor before making any decision.

AI can’t file your taxes -- but it can prep 90% of them Level up your tax preparation with these 10 prompts. Stop stressing about the April 15 tax due date in the US. Start here: 1. Tax Planning Calendar Create a month-by-month tax planning calendar for the current year. Include deadlines for estimated payments, contribution cutoffs (IRA, HSA), and helpful reminders for deductions. 2. Document Organizer What documents do I need to gather to prepare my taxes? Include both income (W-2, 1099) and deduction-related (mortgage interest, charitable donations) forms. 3. Freelancer Tax Prep Make a checklist of everything a freelancer should prepare before filing taxes. Include business income, deductions like home office, and quarterly payments. 4. Deduction Decoder Explain the difference between the standard deduction and itemized deductions. When does it make sense to itemize instead of taking the standard deduction? 5. Quarterly Tax Coach How do I calculate and pay estimated taxes as a self-employed person? Walk me through when payments are due and how to avoid underpayment penalties. 6. Tax Credits for Parents What tax credits are available for parents with children? Include the Child Tax Credit, Child and Dependent Care Credit, and the Earned Income Tax Credit. 7. Crypto & Taxes How do I report cryptocurrency transactions on my tax return? Explain capital gains treatment, taxable events, and how to track cost basis. 8. IRA Strategy Session Compare the tax advantages of a Traditional IRA vs a Roth IRA. When does it make sense to contribute to one over the other? 9. Filing Extension Help How do I file for a federal tax extension? Give me a step-by-step overview, including how much time it buys and what payments I still need to make. 10. Side Hustle Tax Tips What tax steps should I take if I earned side income from a gig or hobby? Help me understand how to track income, deduct expenses, and file correctly without setting up a full business. ♻️ Repost this to help your network with their tax preparation. ➕ Follow Kabir Sehgal for more like this.