What if I'm not sure what my income will be this year, or how AMT might affect my tax level?

Our goal is to help guide your investments towards an optimal after-tax outcome, even with changing circumstances.

We understand that many of our clients, especially business owners and self-employed individuals, experience varying incomes from year to year. This can affect your tax bracket and, consequently, our asset allocation strategy for optimizing after-tax returns.

Anytime your income rises or drops significantly, such that you move into a new federal tax bracket, or if you move to a new state, we recommend that you update your tax information. This will help us determine if adjustments are recommended. For those who see consistent year-to-year variability, reporting an average income level over a few years may also be beneficial in giving us a steady benchmark to guide your allocation. 

If you think the Alternative Minimum Tax (AMT) may apply to you, this means your tax rate is likely higher than average, which may affect our tax-aware asset allocation strategy. In this case, reporting that you're in a high tax bracket, or using an average income over several years, can help us align your tax allocation with your likely long-term tax scenario.

While we don't recommend frequently changing your tax level, keeping us informed of significant changes helps ensure your investments are best positioned for an optimized after-tax outcome. For specific tax advice regarding your tax situation, please consult with your tax advisor. Wealthfront is not a tax advisor and we are unable to provide tax advice tailored to your situation.