Quarterly Update: Greetings

By Chris Cassidy, CEO

My first memorable experience with taxes came when I was 16 years old. I was working my first real job at a family-owned, local business in Brattleboro called Southern Vermont Sprinkler Company. When I got my first pay stub, I was unpleasantly surprised to see many line items, such as Social Security and Federal Withholding that had reduced the size of my paycheck. I quickly realized that it would take a few more pay periods to save up for that car I wanted.

Almost twenty years ago, in my maiden year as an independent tax filer, I did my first tax return using TurboTax. I was sitting in a green foldout lawn chair in my one-bedroom apartment in Burlington eating a TV dinner. I remember inputting W2 and 1099 information and crossing my fingers that I would get a large refund check to put towards the condominium I wanted.

When I started at Trust Company of Vermont as a portfolio manager, I quickly realized that taxes impact many investment decisions. Capital gains taxes must be considered when selling appreciated securities (see table). Loss harvesting can be an excellent strategy at year-end for the potential tax advantages. In taxable accounts, investing in state tax advantaged Treasury Bonds or double tax advantaged municipal bonds can be a good option for investors.

Trust administrators and our in-house attorneys also consider taxes when advising clients. Federal and state estate tax exemptions influence estate planning decisions, such as creating Spousal Limited Access Trusts (SLATs). Taxes must be considered when implementing strategies such as Roth IRA conversions, gifting, and financial planning.

Trust Company of Vermont works collaboratively with a client’s CPA to help gather information, provide clarity, and answer questions. When clients are considering complicated transactions, we always recommend that they review these transactions with their accountant before implementation. Although we do not prepare individual tax returns, we do have a very knowledgeable Tax Department that prepares 1099s and Irrevocable Trust Tax Returns in-house.

Lisa Counsell joined Trust Company of Vermont three years ago and has been a great addition to our Manchester Office. Lisa is a Trust Administrator and Relationship Manager and does an excellent job serving her clients. Lisa has written an article about our Tax Department and all the work that they do behind the scenes.