Outline: Income Tax Liability

1422 Words Feb 5th, 2018 6 Pages
Income tax liability is a very contentious subject as it affects individuals in varying degrees. As such, I would first want to obtain an adequate assessment of the client, to best determine his needs. This assessment will consist of a detailed overview of the clients immediate and long term needs. Through this assessment, I will be able to assist my client in regards to his tax liability. For instance, if the client has a high amount of discretionary income, it may be prudent to enroll the client in tax deferred retirement accounts. In this instance, an IRA would be beneficial for the client as contributions will reduce the client's overall taxable income. However, through my assessment, if it is determined that the client has immediate cash needs; an IRA would not be prudent, as the money must remain within the account until age 65. Through the assessment, I will be able to obtain a better grasp of the client's financial future as well as his ability to defer taxes. With knowledge to the client's assets, liabilities and future obligations, I can then move to the next step in assisting the client.

My next step would involve consulting with the client in regards to his risk tolerance. In many instances, minimizing the client's tax liability may result in increased risk to the client. For example, municipal bonds are tax exempt. These…

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