“…in this world nothing can be said to be certain, except death and taxes.

-Ben Franklin

Taxes are an unavoidable problem, as observed by Ben Franklin in his November 13, 1789 letter to French physicist Jean Baptiste Le Roy. However, many would consider taxes to be of the "high-class problem" variety, although they are a challenge frequently faced in my wealth management profession. One typically must have enjoyed earning some income or a gain on an investment in order to be on the hook for taxes. Indeed, most people should prefer to pay higher taxes as higher taxes are often associated with greater wealth.

However, even with the knowledge that paying taxes is a "problem" resulting from good fortune, most investors are open to ideas that lead to reduced tax payments. Retirement account contributions, Roth IRA conversions, tax loss selling, gifting, and asset location are just a few of the tactics we commonly employ to reduce, defer, or even eliminate tax obligations. When done systematically, we can often demonstrate how those savings materially improve our clients' financial outcomes.

Unfortunately, scammers can take advantage of our preferences to avoid taxes. Each year, the IRS publishes a “Dirty Dozen” list of the most prevalent tax scams that can ensnare even the most financially savvy investors.