I have been a financial advisor for more than 30 years. During that time, I have worked with clients who have prepared their own taxes, those who work with CPAs I have never spoken to or worked with, and those who work with CPAs with whom I have a professional relationship. My preference is to develop a working relationship with the client’s CPA because I find it to be the most beneficial for the client.
One area of planning that seems to benefit most from a team approach is tax planning. If I can work with a client’s CPA during the year, we can plan proactively which options are the most meaningful, most effective, and most beneficial.
Here are some examples of information that is shared throughout the year:
- Dividend and interest income. Updates regarding interest and dividend income allow for more accurate estimated tax payments, if applicable.
- Capital gains and/or losses. Again, updates regarding capital gains and/or losses allow for more accurate estimated tax payments, if applicable.
- IRA distribution. To withhold or not to withhold, that is the question; and then, of course, how much?
- Retirement accounts for the self-employed. More of a planning/cash flow/affordability issue, but letting the CPA know which plan has been selected can help them be more proactive.
- Charitable contributions. A client wanted to make a significant donation and coordination with the CPA in terms of the “right” amount to donate relative to the client’s income tax situation was quite helpful.
- Roth conversions. A client’s unique situation in a given year may allow for Roth conversions in a low income tax bracket. Coordinating with the CPA to provide as much information as possible about the client’s tax situation can create opportunities.
Each client’s situation, of course, is unique, but what is not unique is that coordinating and sharing information with the CPA can provide opportunities and benefits for all.
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