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.