Your browser does not support JavaScript
 

Blog & News

Why You Should Provide Your Tax Return to Your Financial Advisor Each Year
Posted By:  Chris Allen, CFP
Thursday, April 18, 2019

Why You Should Provide Your Tax Return to Your Financial Advisor Each Year

With the 2018 tax season behind us, now is an ideal time to share a copy of your federal and state tax returns with your financial advisor. As an advisor at Total Wealth Planning, having a recent copy of a tax return enables our team to optimize each client’s specific tax situation, and leverage short and long term tax planning opportunities.

Tax planning is a major part of the financial planning process at Total Wealth Planning. We believe in a holistic planning approach rather than investment management only. Reviewing tax returns are an essential part of this process since it allows us to better understand our clients’ financial picture, collaborate with their tax professional, and helps us prepare and advise certain tax strategies for the upcoming year.

Our tax return review process

First and foremost, we want to reconcile any tax planning strategies that were implemented for each client, and confirm the outcome was as expected. Occasionally costly tax preparation mistakes are uncovered stemming from miscommunications or misunderstandings.

For example, charitable planning strategies can be missed. For those clients that are age 70½ or older and gifting from their IRA using Qualified Charitable Distributions (“QCDs”), we can verify that the gifts are properly treated for maximum tax savings. Gifting appreciated securities can also be an advantageous charitable tax planning strategy. Since most clients that utilize this strategy gift from their accounts under Total Wealth Planning’s management, we are able to validate the tax reporting on these gifts.

Roth Conversions are another commonly used tax planning strategy at Total Wealth Planning. We can add value by monitoring and planning for years with little or no income. During these years, a Roth IRA conversion strategy can convert Traditional IRA assets to Roth IRA assets. By accelerating taxable income from a Roth conversion while in a low income tax bracket, you and/or your beneficiaries benefit from one or more lifetime of tax-free growth. A Roth conversion also has the impact of minimizing Required Minimum Distributions (RMDs) which can significantly reduce one’s tax liability throughout retirement.

Once we reconcile all prior year strategies, we want to ensure that the appropriate amount was withheld for the year and look toward the following year’s plan.

Whether there is a tax refund or tax due, we have the ability to change any future tax withholding from IRA distributions, or determine how much and if estimated tax payments should be made for the following year in order to meet Safe Harbor. We may not recommend the same tax planning strategies each year, so at times the estimated tax payments that are recommended may not be appropriate if there is a change in circumstance from one year to the next.

Much of the tax planning strategies rely on managing the marginal tax bracket. From determining the rate at which long-term capital gains are taxed to whether the 3.8% Medicare surtax will impact the overall tax liability, it is extremely beneficial and necessary to know your marginal tax bracket.

The tax return may also inform us of a capital loss carry forward. This may permit us to recognize tax-free portfolio rebalancing and profit taking decisions.

Lastly, if there are changes to the tax code, by having our clients’ tax return, we can be better equipped to make decisions that may be impacted by those changes.

Always send your tax returns securely

Anytime you are asked to share sensitive information, such as your tax return, we strongly suggest delivering it in a secure manner.

Specific ways to send to your advisor at Total Wealth Planning are:
  •  Mail or fax (513-984-9270) a paper copy to us
  • Stop by the office and we’ll scan a copy while you wait
DOWNLOAD PDF



 
 
Subscribe To Our Blog

Blog Categories

  • Business Owners
  • Charitable Planning
  • Client Experience
  • College Planning
  • Estate Planning
  • Executive Compensation
  • Firm Updates
  • In the News
  • Investments & Market Updates
  • Net Worth
  • Retirement Planning
  • Security & Privacy
  • Taxes
    • 05/30/2019 - Increasing Taxable Income as a
    • 04/18/2019 - Why You Should Provide Your Ta
    • 02/12/2019 - Reducing Your Real Estate Taxe
    • 12/04/2018 - Payments to the IRS through "D
    • 08/01/2018 - Value of Roth Conversions
    • 06/18/2018 - Charitable Gifts from your IRA
    • 04/27/2018 - The Tax Saving Power of a Heal
    • 12/21/2017 - Tax Cuts and Jobs Act of 2017
    • 11/03/2017 - 2017 Year End Tax Planning Str
    • 10/19/2017 - Tax Preparation is not Tax Pla
    • 09/17/2014 - 2013 Obamacare Taxes for High
    • 09/17/2014 - American Taxpayer Relief Act o
 

INVESTMENT
MANAGEMENT

Your investment philosophy should be grounded in academic research and financial science. Our team will build you an investment portfolio that aims to give you the highest probability of achieving your goals with the least amount of risk.

Learn More
 

RETIREMENT AND
TAX PLANNING

Figuring out how to recreate your paycheck or developing a spending policy should not be an overwhelming exercise. Our team has the expertise to help with retirement portfolio, tax strategies, distribution planning, social security maximization strategies and more.

Learn More
 

HOLISTIC/COMPREHENSIVE
PLANNING

We’ll have discovery conversations, gather and organize your data, then craft comprehensive plans to achieve your life and financial goals. As our ongoing commitment, we consistently monitor and tweak your plan to ensure you’re on track and surprises are minimized.

Learn More

WE'VE BEEN LISTENING
FOR OVER 25 YEARS

Life brings many transitions. Find the right advisor to fit your needs on a fee-only basis, and take the first step in the journey. Total Wealth Planning's team of Certified Financial Planners® guides Cincinnati families and associates through transition.


Total Wealth Planning Associations
WE ARE PROUDLY ASSOCIATED WITH

CONTACT INFO


 

WHAT'S NEW AT TWP


       
CORPORATE EXECUTIVES

WEALTH-BUILDING FAMILIES

RETIREES

BUSINESS OWNERS
ECONOMIC OUTLOOK

BLOG & NEWS

VIDEO LIBRARY

   
4665 Cornell Rd. Suite 160, Cincinnati, OH 45241 4665 Cornell Rd. Suite 160, Cincinnati, OH 45241
513-984-6696 513-984-6696
info@twpteam.com info@twpteam.com
Total Wealth Planning named finalist in Cincinnati Business Courier's 2-10 Best Places to work!
Monday, September 16, 2019


SEE MORE >

Follow us on Google+
Blog & News
Follow us on Twitter
Find us on Facebook
DISCLOSURES | COPYRIGHT © 2019. TOTAL WEALTH PLANNING. ALL RIGHTS RESERVED.
GET STARTED
READY TO
GET STARTED?