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

By The Advocates

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.