As tax season begins to wind down (for most of us), you might be breathing a sigh of relief that you’ve gotten everything either to your CPA or you’re filing everything yourself.

But what if we told you there’s one more person you should be sharing your tax information with?

In our years as financial advisors, we’ve helped clients take a closer look at their tax returns – and even, in some cases, have found where they could be getting more back from Uncle Sam. While it might seem like an additional step, sharing your tax information with your financial advisor can be a crucial aspect of managing your finances effectively.

Here’s How a Financial Advisor Can Help You at Tax Time

Comprehensive Financial Picture

Your financial advisor’s job is to help you make informed decisions about your money. To do this effectively, we need a complete understanding of your financial situation. By providing us with your tax information, you’re giving us insight into your income, deductions, investments, and any potential tax liabilities or benefits. This comprehensive view enables us to tailor our advice to your specific circumstances.

Strategic Investment Planning

Different investment strategies can have varying tax implications. For example, investing in tax-advantaged accounts like IRAs or 401(k)s can lower your current tax bill while saving for retirement. On the other hand, certain investment transactions, such as selling stocks or mutual funds, can trigger capital gains taxes. By understanding your tax situation, we can recommend investment strategies that align with your tax goals and overall financial plan.

Identifying Missed Opportunities

Tax laws are complex and ever-changing and each year it’s important to look for potential opportunities to minimize your tax burden. Whether you’re working with a CPA or filing your taxes on your own, a financial advisor is another set of eyes to make sure you’re taking advantage of every option available to you. This might include harvesting investment losses to offset gains, taking advantage of tax-efficient investment vehicles, or maximizing deductions and credits.

Detecting Errors and Inconsistencies

Mistakes on tax returns can be costly, leading to penalties, interest, or even audits by tax authorities. By sharing your tax information with your financial advisor, you provide an additional layer of scrutiny. We can review your tax return for accuracy and consistency, flagging any potential errors or discrepancies that need to be addressed. This proactive approach can save you time, money, and stress down the line.

Holistic Financial Planning

Your tax situation doesn’t exist in a vacuum—it’s intricately connected to your overall financial plan. By integrating tax planning into the broader scope of your financial strategy, your advisor can help you achieve your long-term goals more efficiently. Whether it’s saving for retirement, funding your children’s education, or planning for major life events, understanding the tax implications is essential for making informed decisions.

 

No one looks forward to tax season. However, it can feel good to take the information you’ve already gathered and use it to help create the future you’re envisioning. If you haven’t worked with an advisor in the past, this is the perfect opportunity for you to get the process started. If you’re already one of our clients, feel free to reach out with your tax information and we’ll take a look at it. You could be helping your present and future self.

 

All opinions expressed in this blog post reflect the judgment of Approach Retirement Advisors, LLC (“Approach”) as of the date of publication and are subject to change. The information in this blog post is believed to be factual and up to date; however, we do not guarantee its accuracy. This blog post should not be regarded as a complete analysis of the subjects discussed. This presentation is for educational purposes only and does not constitute personalized investment advice. A professional advisor should be consulted before implementing any of the strategies presented. This blog post should not be construed as an offer to buy or sell or as a solicitation of any offer to buy or sell any securities mentioned herein. Clients and members of Approach may own any securities mentioned herein. Investments are subject to market risks and potential loss of principal invested, and all investment strategies have the potential for profit or loss.  Past performance is no guarantee of future results. Different types of investments involve varying degrees of risk. There can be no assurance that any specific investment will be suitable or profitable for a particular investor’s portfolio. There are no assurances that any portfolio will match or outperform any particular benchmark.