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Tax Advisory & Strategic Planning
Our role as tax advisors goes beyond compliance – we become your strategic partner in reducing tax liabilities and avoiding pitfalls. Through our tax advisory services, we analyze your financial situation and long-term goals, then recommend tailored strategies to optimize your tax position. Tax laws are complex and ever-changing, but with proactive planning, you can legally lower your taxes and increase after-tax wealth. Gregory Monaco, CPA LLC brings experience and up-to-date expertise (familiar with the latest IRS regulations, court rulings, and potential upcoming changes) to every advisory engagement. We serve clients in Livingston, NJ and beyond, offering both in-person consultations and virtual advisory meetings, so you can get expert guidance no matter where you are.
Business Structuring & Entity Selection
One of the most impactful decisions for a business owner is choosing the right entity type. We advise new and existing businesses on whether to operate as a sole proprietor, LLC, S Corporation, C Corporation, or partnership, considering tax consequences for each. For example, an LLC can elect to be taxed as an S-Corp to potentially save on self-employment taxes – we’ll run the numbers on salary vs. distributions to see if that yields savings for you. We explain the trade-offs: S-Corps avoid double taxation and can cut employment tax on distributions, but require reasonable payroll and some formalities; C-Corps benefit from a flat 21% rate and possible fringe benefits but have double taxation on dividends (though for some, the Qualified Small Business Stock exclusion might be a lure – we’ll discuss if applicable). If you’re planning to raise capital, a C-Corp might make sense despite tax cost; if you’re a one-person consultant, maybe an S Corp is ideal. Our advice is holistic: we factor in legal liability, administrative burden, and your income level projections. We also help with the mechanics – filing S-Corp election (Form 2553) timely, setting up accounting to separate personal and business, etc. Beyond initial structure, we continually revisit it: maybe your LLC taxed as partnership should switch to S-Corp once profits hit a certain point, or vice versa if laws change. Furthermore, for businesses operating in multiple states, we plan for nexus and apportionment to minimize state tax burdens (for example, maybe forming a Delaware corporation, but ensuring you register and comply in NJ where you’re based). We also advise on exit strategy: if selling the business in the future, structure now can affect taxes later (e.g., asset sale vs stock sale differences). By addressing these issues early, we help you avoid expensive restructuring later or surprise tax bills.
Tax Strategies for Individuals & Families
For individual taxpayers, especially those with high income or complex financial lives, we provide personalized tax planning. Some key strategies and topics we handle:
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Retirement Contributions & Withdrawals: We help you choose between traditional vs Roth 401(k)/IRA contributions (tax deduction now vs tax-free later), maximize contributions to SEP-IRA or solo 401(k) if self employed, and plan Roth conversions in low-income years or before expected rate increases. We also strategize required minimum distributions (RMDs) to minimize tax, possibly using Qualified Charitable Distributions (QCDs) to satisfy RMDs tax-free if you’re charitably inclined.
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Timing of Income & Deductions: If you have control over income timing (say a year-end bonus or a sale of stock/business), we project your tax bracket this year vs next to suggest deferring or accelerating income. Similarly, we might bunch itemized deductions in one calendar year to get over the standard deduction threshold (for example, paying two years of charitable donations or property taxes in one year if it will lead to a better deduction, mindful of SALT caps).
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Family Tax Planning: We advise on 529 college savings plans (and the state tax benefits NJ offers, albeit limited), employing children in a family business (which can shift income to possibly lower tax brackets and even fund a Roth IRA for them), and gifts/estate planning for tax efficiency. The current federal estate tax exemption is high (~$12.9M in 2023), but it’s scheduled to drop after 2025; we coordinate with estate attorneys on strategies like gifting or trusts to utilize exemptions. Also, if you’re supporting elderly parents or adult children, we check if you can claim them as dependents for tax benefits.
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Investment Tax Planning: We look at capital gains and losses – harvesting losses to offset gains , using long-term vs short-term planning (holding assets >1 year for lower rates whenever feasible). We’ll ensure you’re mindful of things like the 3.8% Net Investment Income Tax if your AGI is above $200k/$250k, and we’ll suggest moves to reduce AGI (like contributing to an HSA or retirement) to avoid crossing thresholds that trigger phase-outs or NIIT. If you have stock options or RSUs, we guide on tax implications of exercising vs waiting (AMT considerations for incentive stock options, etc.).
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Life Events: Marriage or divorce, new baby, new home – all these have tax impacts. We help plan for marriage penalty/bonus in taxes, updating withholding, using the NJ marriage penalty relief (NJ has some provisions if both spouses work). In divorce, we advise on the new rules (alimony not deductible for post-2018 divorces , but still taxable to recipient? Actually no, post-2018 alimony is not taxable to recipient either; we clarify issues like that and help structure divorce settlements tax-efficiently).
Our individual tax planning is very tailored – it might include creating custom multi-year projections. For example, if you expect a spike in income next year (maybe exercising stock or selling a property), we plan now: perhaps accelerate deductions or consider a donor-advised fund contribution in the high income year to get a big charitable write-off.
Multi-State & Specialized Tax Planning
If you live or work across states (common in NJ/NY area), we navigate credits for taxes paid to other states, and residency planning (e.g., if you moved from NY to NJ or FL, we help establish clear residency to avoid double taxation – NY’s 183-day rule and domicile tests). We ensure you file correctly in all relevant jurisdictions. For remote workers, 2020-2021 had a lot of issues: we can advise on how NJ and other states handle telecommuting (the “convenience of the employer” rule, etc.). Additionally, we handle specialized areas: crypto tax planning (we already covered in crypto pages – advising on when to realize gains or utilize low-rate brackets, etc.), international (we assist U.S. taxpayers with foreign assets on FBAR/FATCA compliance, and foreign income exclusion or credits if you worked abroad). Another example: small business owners might consider the NJ BAIT (Business Alternative Income Tax) which is a workaround for the SALT deduction cap via entity-level tax. We explain it and help elect it if beneficial.
Year-Round Consultation & Decision Support
Our advisory service isn’t just a one-time report; we offer ongoing access for questions. Did you get an offer for a new job and want to compare after-tax pay in NYC vs working from NJ? Call us. Thinking of buying or leasing a car for business – we’ll break down the tax aspects (Sec 179 vs lease deduction, mileage vs actual expenses). Contemplating converting your LLC to an S-Corp mid-year – we’ll simulate the tax impact. Essentially, before you make major financial decisions, having a CPA perspective can save money or avoid unintended tax consequences. We encourage clients: “Run it by us first!” This could even include things like how much to withhold from a bonus, should you adjust W-4 for a big stock sale, etc. By having that year-round relationship, we turn tax planning into a continuous process, not just a year-end scramble.
Because tax rules constantly change, we stay vigilant: e.g., the potential sunsetting of many provisions in 2026 (reversion of tax brackets, standard deduction halving, personal exemptions returning, etc., as TCJA expires) – we are already thinking ahead: perhaps advise taking advantage of current rates by realizing income or converting Roth before 2026 if appropriate. Or preparing clients for the estate exemption drop in 2026 by using it now if they can.
In all advice, compliance is a must – we suggest strategies within legal bounds and document them. If something aggressive is considered, we’ll outline risks and likely steer towards more secure strategies. Our reputation and your peace of mind matter – we don’t promote “tax schemes,” just smart planning.
FAQS
Q: Can you work with my financial advisor or lawyer on comprehensive planning?
A: Certainly. We often collaborate with financial planners, investment advisors, and attorneys (estate planners, business attorneys) to coordinate the tax aspect of a broader plan. For instance, if you’re doing an estate plan, we’ll work with your attorney to consider gift tax implications or trust taxation. If you have a financial advisor adjusting your portfolio, we can communicate to manage capital gains distributions or tax loss harvesting together. This team approach ensures all angles (legal, financial, tax) are covered in one cohesive strategy. With your permission, we’re happy to be part of your advisory team and can join meetings or provide documentation as needed.
Q: I’m not super-wealthy; is tax planning really going to help me?
A: Tax planning isn’t just for millionaires. Even middle-income individuals can benefit. Examples: deciding if you should contribute to a traditional 401k vs Roth 401k given your future outlook – that can mean thousands more in your pocket at retirement. Or for a family making, say, $150k, careful bunching of deductions or using an FSA/HSA to lower taxable income can easily save a couple thousand dollars a year. Ensuring you take the right credits (education credits if you or kids are in college, for instance) is another form of planning. Also, avoiding penalties by adjusting withholding or estimates is important at any income. So yes, tax planning scales to your situation. We tailor our level of planning to complexity and need. Often our advice adds significant value – our aim is that the tax saved or future gains exceed our fee, making it a clear win for you.