The Advisor Cannot Say to the CPA, I Have No Need of Thee

Trying to craft a snazzy intro to another tax piece is…taxing. You’re welcome.

Some of you may not read past this point so here’s the gist: your CPA and your advisor need to talk about your taxes. I’m wiling to give it away upfront because it’s more important than most people think. Read on to find out why.

Even the best CPAs aren’t psychic. They work with the data you give them, and if you miss something, so do they. We spend every Spring reviewing our clients’ tax returns for exactly this reason, to catch problems like the below:

  • Unrecorded QCDs, because they’re not reported on the 1099.
  • Missed contributions to a donor-advised fund (DAF).
  • Missed 1099s, K-1s, and other tax documents.
  • Failure to record HSA contributions when they’re not processed through payroll

Yes, errors happen. But an advisor who’s familiar with the year’s financial happenings is the best choice for a second set of eyes.

So, hook us up with that tax return! Ideally before you file. Please.

Look, it’s nice to catch errors and prevent problems; makes you feel like a hero, kind of. And for the most part, errors caught prior to filing can be corrected with little headache and filed returns can be amended at the cost of additional time, paperwork, and maybe some fees from your tax professional.

Where it really hurts is when you’ve missed opportunities and there’s no hero mode for that.

Because taxes typically involve a single calendar year, the obvious deadline to perform certain tax-saving maneuvers is 12/31 of that year.

You and your professional need to plan, in concert, well before the year-end deadline to ensure you’re taking every possible advantage. When that doesn’t happen, we find things like the below, especially with new clients:

  • Not taking advantage of large loss years with an offsetting Roth conversion.
  • Paying FICA taxes as a Sole Proprietor for a business you own, but don’t work in.
  • Not maximizing charitable giving by using appreciated holdings for donations.

Things get more significant in milestone years like, say, the year you retire. If you’ve had or are nearing a significant life event, it’s imperative to connect your tax and advisor professionals and be strategic in your tax planning.

If hindsight is 20/20 then do your future self a favor and start planning today, for taxes and so much more.

Schedule your free, no obligation appointment today to see what The Advocates can do for you, tax included.

Search Engines Make Bad CPAs

The more I talk to Kurt Box about taxes, the more I understand the importance of collaboration, especially between your tax professional and your financial advisor and, by extension, the value of incorporating financial professionals into your life.

I don’t have a CPA. My situation is not complex, and TurboTax does the job for my family. BUT, if my finances gain one iota in complexity, I’m outsourcing the job.

This decision was made and affirmed by my attempt at navigating tax time via Google. Luckily, I had Kurt to check these results with me.

What we offer here are selections from our pseudo-interview that showcases Kurt’s personal opinions on the quality of advice coming out of these search results.

But first, pleasantries.

A: We can’t escape tax talk, can we? It feels like there isn’t a single “tax time” for us. We have to look at them, from different perspectives, year-round.

K: Yeah, we do, but there are some “seasons” to it.

In January, it’s about projections, ensuring the right amount of tax is being withheld, increasing 401k contributions and planning for upcoming events for clients that may cause tax concerns.

In April, it’s all about reviewing tax returns before our clients file them, because you know, human error. And…in November we’re planning. It’s heavy lifting time: lots of tasks, lots of meetings.

A: How would you design the tax code if you could?

K: Oh boy. I guess #1 is stop trying to incentivize behavior. To me, it’s not the government’s place to do so. I don’t like how they offer tax breaks for certain things and not others. They pick and choose based on what they want to promote. Point #2 is that I would make it super simple, super easy, so that everyone can do their own taxes.

A: Would you make it a flat tax?

K: Doesn’t have to be a flat, but it needs to be simple.

A: Would you consider running for office?

K: [laughs] No! Are you kidding me?! – what office are you even talking about? Whatever office it is, no.

The plan is simple: I show him the articles I’ve read, and he gives me his comments: good, bad, or otherwise. We’re reviewing 3 of the top results because that’s all we can tolerate.

9 Tax Tips That Could Save You Money Now by Merrill Lynch yields 3 comments from Kurt:

Keep track of where you’ve worked remotely out-of-state or country.

“We see this a lot for employees of energy companies. It’s a really good tip, but it doesn’t apply to many people. People in this circumstance should probably seek help from a CPA.”

Look for tax-aware investing strategies.

“Good tip – but they only name one strategy? With rates being high now – you do want to hold all or most of your fixed income inside an IRA, and other equities in an after-tax account. You should meet with your advisor about the possibilities.”

Cover healthcare costs efficiently.

“Yeah, some people can really benefit from high-deductible plans that are HSA eligible. I mean, it’s good that they mention these, (HSA, FSA) but they fail to give good advice – you should save and invest the money and grow it for future use where possible. Generally speaking, it’s a good tip, but they missed a chance to give some good advice. “

6 Strategies to Protect Income From Taxes by Investopedia

He finds little to comment on, other than a bewilderment at item 6 where the advice is to “claim your tax credits”, which seems, rather than a strategy, to be just part of doing your taxes.

12 Tips to Cut Your Tax Bill This Year by NerdWallet

I usually like NerdWallet, but most of the 12 have been covered by other listicles and he comments only two of them.

Topping the list is “Tweak your W-4” which in context is good advice that most articles don’t cover. But it’s important, says Kurt, to coordinate with your spouse to find the proper amount of withholding from your paycheck.

Your aim should be a zero on your return; nothing owed, nothing refunded. The truth is you’re lending the government your money if you’re overpaying and receiving a refund. If it’s possible for you to invest that money to your own benefit, you should. If you’re owing huge amounts, you may need analyze why and adjust. Zero is the goal.

Number eleven charges us to sell those “dogs” weighing down your portfolio by which they mean, tax-loss harvesting. First of all, he says, “why bring dogs into this?! I’ve never understood that expression. Dogs are awesome, not something to get rid of…

Second, just because something is down in your portfolio doesn’t mean you should sell it. I don’t like this advice. People should consult their financial advisor before doing anything like this.”

Later, we spend 3 minutes lamenting Microsoft Word’s inability to stop correcting “HSA” to HAS. I’ve rarely seen him this upset.

He calls it “one of his top ten nuisances” and says the “Add to dictionary” button is a lie.

Our last stop is just for kicks. I found this article from Yahoo showing 23 “ridiculous” tax loopholes, some of which are bizarre, and some which he believes are not ridiculous at all. It yields more questions than answers, so I tuck those responses away for another time.

We’re done fact-checking the internet I’ve reached a few conclusions: 1) the redundancy from page to page is frustrating, 2) Kurt is the most fun when he takes the tangent detour, and finally, these generic tips are pointless because many of these tips are dependent on the framework of the individual taxpayer.

That means, at a minimum, you should do some research before accepting tax advice derived from the web. It’s not all meant for you.

Ready to collaborate? Schedule an appointment with us today to see what holistic planning can do for you.

Neither Kurt Box individually nor any employee of The Advocates is a tax professional. Kurt’s comments are his own and should not be construed as tax advice. You should discuss the specifics of your circumstances with a tax professional. This article is intended to showcase the importance of tax advice as it relates to financial planning.

Strategic Giving Saves One Client Six Figures in Taxes

Just like last week’s QCD illustration, this one too is based on a real fact pattern for a real client with a real outcome. You should discuss the facts of your situation with your advisor.

Don’t have one? Click here to set up a free, no obligation appointment with us. 

Sending Less to the IRS

The clients in today’s illustration were long tenured with a large oil and gas company before they decided to retire. One of them had over $250,000 in company stock with a low basis of only $8,500 in their 401(k) plan, all pre-tax money.

Sounds like they’re about to pay a lot of taxes! Read on to see how we were able to save them big tax dollars with a smart alternative to the traditional 401(k) rollout. But first, let’s look at the facts of their case:

Key Facts

  • Their retirement comes with a nice pay package that’ll put the couple in the top marginal tax bracket. That means 37% at retirement, but they’ll be in the 24% bracket for the foreseeable future thereafter.
  • They have no mortgage.
  • The give large amounts to charity every year and, because of their retirement income, they want to give $100,000 now.

Reducing Their Tax Burden

Our advisors were able to help our client take advantage of a technique called Net Unrealized Appreciation (NUA).  Here’s how it works:

  • Our client makes a large charitable donation of $250,000 now.  That covers the $100,000 they want to give upfront along with all charitable giving for the next 6 years at $25,000 annually.
  • We transfer all their low basis company stock “in kind” from the 401(k) to an after-tax brokerage account. The charitable donation is made from this account.
  • Per NUA rules, our client pays ordinary income tax on the $8,500 basis. The difference versus the stock’s current value becomes long term capital gain.
  • All other pre-tax 401(k) money rolls into an IRA with no tax consequences.

The Impact

The following table shows what NUA was able to save our client versus the traditional 401(k) rollout with annual charitable giving over a six-year period.

 Traditional Rollout
to Pre-Tax IRA
Initial Charitable Donation$100,000$250,000
First Year Tax Savings$30,451$85,951
6-year Giving Tax Savings$11,512$0
Additional Income Tax Paid$0-$3,145
Other Tax Adjustments$0$60,000*
NET SAVINGS$41,963$142,806

That’s a difference of $100,843 in tax savings, and our client will never pay capital gains on the appreciated stock they donated.

Look at it this way: the traditional scenario would have saved our client around $42,000 in taxes creating a net “cost” for the company stock of about $208,000.

Taking advantage of NUA saved our client $142,806 for a net “cost” of $107,194, creating the $100k+ savings you see above. That’s a lot money more in their pockets and not in the IRS coffers.

Not everyone will be able to take advantage of NUA, but for those who fit the criteria, there are potentially huge savings to be had.

*If our clients had taken the traditional route, they would have paid income tax on every withdrawal of that $250,000. Because the stock was donated “in kind” those taxes are GONE. That’s a tax savings of $60,000.

Smart Changes Can Save Serious Taxes

This illustration is based on a real fact pattern for a real client with a real outcome. You should discuss the facts of your situation with your advisor. Don’t have one? Click here to set up a free, no obligation appointment with us. 

No real client names will be used and, in the absence of a better idea, I’m going to name this couple after some of my kids’ pets. Meet Buck and Starfire. Here’s their situation:


  • They have no mortgage and pay $3,250 in property taxes. 
  • Their property tax and sales tax deductions total around $5,000 each year.
  • They donate ~$45,000 to charity annually.
  • They are RMD eligible because they are over age 72.
  • They don’t need the roughly $50,000 distribution their RMD status dictates.
  • Their current tax bracket is 24% because they have
  • other sources of income.
  • And finally, their 2023 standard deduction is $29,200.


People with circumstances like Buck and Starfire’s may benefit from the solution we implemented for them, the QCD (Qualified Charitable Distribution).

A QCD allows you to stop donating to charities out of pocket and instead donate directly from your IRA. For Buck and Starfire, this means $45,000 less income each year. Most of their RMD is satisfied with the QCD and they no longer need to itemize.

As a result, their taxable income drops by $24,200, saving them $5,808 each year and $58,000 over the next decade.


Here’s a not-so-secret secret. “The Advocates” is a confusing name for a financial planning firm. It’s been nearly 7 years since we changed it and we still occasionally get mistaken for a non-profit, a legal (or related) firm, or even an architecture firm.

Once I began answering phone calls with the new name, clients would occasionally taunt me with a little good-natured razzing. One asked me if we all got “capes” with the name change. Were we purporting ourselves as superheroes?

I don’t hate the idea, but I can think of some regulatory bodies that might take issue with such a portrayal. However, I can safely report that none of us have donned capes, at least not for work purposes.

I’d trade my cape for a pair of pom-poms anyway. We’re less hero and more cheerleader with financial expertise and a deep desire to help.

We love to see clients win, in big ways and little, whether they’re exuberant about it, or apathetic. We know not every client will have these kinds of wins; there are no guarantees. Undaunted, we are determined to give our best to every client we work with.

We rejoice in the helping. That’s why we call ourselves The Advocates. I think it fits.

Mildly Interesting Notes from the SECURE 2.0 Act

Note: The Advocates are not legal professionals. No part of this post should be construed as legal advice. These points are presented here because of their relevance to financial planning.

SECURE 2.0 is legislation designed to improve upon the SECURE Act of 2019 and it has potential implications for your financial plan and your taxes. Your advisor is the best person to discuss the relevance of this information to your specific situation, but it’s my job to try and turn it into a blog post someone might actually want to read.

Sometimes you can’t make it interesting, but you can make it quick. Here we aim to break what may matter to you into consumable bullet points. This list is not comprehensive as the act itself spans over 4,000 pages of what I can only assume is boss-level legalese.

Required Minimum Distributions (RMDs). 

  • The age is now 73 and will move to age 75 in 2033.
    • That means no one will be required to start taking RMDs in 2023.
  • Penalties for failure to take RMDs have been significantly reduced.

Roth accounts

  • No RMDs for ERISA plan Roth accounts (401(k), 403(b) etc.) starting in 2024. If you’ve already started taking them, you will be able to stop next year.
  • Roth SIMPLE and SEP IRAs will be available this year.
  • Starting in 2024 high income earners age 50+ must make catch up to Roth accounts, NOT pre-tax accounts
  • 529 plans can now potentially be rolled to a Roth IRA, restrictions apply.

Individual 401k Plans: 

  • Self employed individuals can now establish an I401k plan and fund it for the previous year.

Employer 401(k) Plans

  • Mandatory automatic enrollment for eligible plan participants will be required for new 401k and 403b plans after 12/31/2024.

Student Loans:

  • Employers can match payments their plan participants make to their student loans, restrictions apply.  The match applies to the 401k.  i.e. if participant is not getting the match, the loan payment the ex student is making gets matched.

Database for Missing Participants

  • A national, searchable database will be created to help employers locate “missing” plan participants and also the reverse, helping individuals locate old retirement funds.

Want to know if any of this could benefit you? Give us a call, or schedule your free appointment today.

Want more information on SECURE 2.0? A section by section summary can be found here.

You may not be the best person to do your taxes

I’m southern. And as such, I’m accustomed to cushion the blow of unwelcome news with something sweet. So, grab some leftover Christmas treats to nosh on while you read this. 

You should start thinking about your taxes now.

And though April 15th seems distant, we all know it’ll be here before you know it.

Really, you should be thinking about your taxes far more regularly. Or you can outsource that work to a professional. If you’re considering it, you may wonder when’s the right time to hire one? And how do you pick a good one?

We are not tax professionals; we are financial planners. Taxes are one of the classic six areas of financial planning and can have a significant impact on your financial health now and in the future. This is one of the reasons we collect and review our clients’ tax information and take your specific tax situation into account when planning for you. We often work in collaboration with a client’s CPA, but we can’t file your taxes.

I asked our advisor, Kurt Box, perhaps for my own benefit, when he thinks a person should hire a tax professional to handle their annual return. In typical Kurt form, he said, “when it takes you more than 20 minutes”.

Knowing that far simpler tasks take me longer than 20 minutes, I press on, “ok, but what else?”

He offers this rule of thumb: if you have income other than a 1099-R for retirement distributions, or W-2 for salary, you should probably outsource to a professional. Message received: if it’s simple and quick he recommends self-preparing using a tax software.

I admit that Kurt is usually right. Nevertheless, this remains a personal decision. Consider the below when deciding to self-prepare or hire a professional:

  • Your own experience and confidence with tax preparation
  • The amount of time you’ll spend preparing and filing
  • The complexity of your situation

How do I know if my situation is complex?

While there is no comprehensive definition of tax complexity for our purposes here, some common complex scenarios include:

  • Self-employment
  • Significant life events like marriage, divorce, inheritance, etc.
  • Owning rental properties
  • Foreign accounts, employment, or investments

There are scarier scenarios that should be considered as well. If you need to file an amended return because of an error or omission, or have the unfortunate experience of being audited, a professional may be the best option for you.

So, you want to hire a tax preparer…

No one’s looking to hire a bad or negligent person to prepare their taxes, but they are out there, and they often look just like the good ones. To reduce your chances of engaging one, try these ideas:

  • Choose someone who holds the Certified Public Accountant (CPA) designation. I can’t speak for all instances, but if your tax preparation company has a sign twirler in front of their location, see the last bullet.
  • Talk to friends and family that you trust. Find out who they use and if they’re happy.
  • Ask your other trusted financial professionals. We’re more than happy to recommend tax professionals who have historically done well for our clients. We don’t take kickbacks, either.
  • Chat with the professional before you engage them. Just a quick call to see if they’re a fit for you. Bonus points if they’re funny or charming.
  • Check their credentials. The IRS keeps a public directory of tax preparer credentials here.

Few people are excited about the prospect of self-preparation or outsourcing. No matter how you decide to handle your taxes, keep these simple recommendations in mind while you weigh what’s best for you and your family.

If you’re a client of The Advocates and are having trouble deciding, please give us a ring. Your advisor will almost certainly have an opinion to share. 

Not a client yet? Schedule a free appointment here.