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Are You Missing Out Because Your Financial Advisor Doesn’t Talk To Your CPA?

Are You Missing Out Because Your Financial Advisor Doesn’t Talk To Your CPA?

It’s officially tax season! Are you maximizing all of the opportunities available to you? If you’re like most people, you depend on your CPA to take care of that. You have a CPA for tax things and a financial advisor for investments. You probably keep those two financial areas separate except for once a year when your investment providers send you tax forms that you forward to your CPA.

But is that the best way to do it?

How CPAs And Financial Advisors View Taxes Differently
There is actually a lot more overlap between taxes and investments than most people realize. If you are keeping them separate in your life, then you could be missing out on great opportunities. You see, CPAs and financial advisors view taxes differently and you need both perspectives to maximize your investment outcomes.

Your CPA views your taxes from a tax perspective. Their goal is to make sure you are following the tax law and not doing anything to get yourself into trouble. When they look at your annual retirement contributions, they want to make sure you didn’t exceed your limits or do anything else that is forbidden by the IRS.

When a financial advisor views your tax return, they view it from an investment perspective. Are you making the most of your investment opportunities? Could you be contributing more to retirement? Is there a more effective savings vehicle available to you? As you can see, when a CPA and financial advisor look at the same thing, they view it from two totally different perspectives, which gives you a more complete picture of the issue at hand.

What To Look For On Your Tax Return
What is it that a financial advisor will see on a tax return that a CPA might miss? There are a number of things that are easy to overlook when your focus is on taxes and not investments. Here are some things to look for:

Retirement Catch-up Contributions
Most retirement accounts allow extra contributions once you reach age 50. For IRAs, you can contribute an extra $1,000 and for 401(k)s you can contribute an extra $6,000. This might be an important tax-deferred savings opportunity that you don’t want to miss.

Roth Conversions
Traditional 401(k) and IRA money is contributed pre-tax, so you pay your income taxes when you withdraw the money. Roth accounts are post-tax and withdrawals are tax-free. You can convert funds from a traditional account to a Roth account before retirement by paying the income taxes on the money. If you have a year where you are in a low tax bracket, it might be wise to convert your retirement funds so that you pay the taxes at a lower rate than you would in the future.

Required Minimum Distributions
Once you hit a certain age, you are required to begin to withdraw money from your retirement accounts or face a stiff IRS penalty. This is not something that your CPA would be looking out for but will have a big impact on your taxes.

Qualified Charitable Distributions
If you have to take required minimum distributions, you can have them sent directly to a charity. Doing so will satisfy your distribution requirement and will not be counted as income for you, so you don’t have to include it on your tax return.

Other Gifting Opportunities
For those who are charitably inclined, being strategic about your gifting can save you a lot in taxes. For example, gifting an asset with a low cost-basis may save you from having to pay any capital gains on the asset.

Tax Harvesting
There is an upside to having an investment that is down. If you sell it, you can count the loss against your other investment gains and taxable income to minimize your overall tax bill. Strategic tax harvesting can have a great impact on both your investment returns and taxes long term.

How We Can Help
Clearly, there are tax-saving opportunities that the typical CPA may not see. That’s because it’s not their job. It is your financial advisor’s job to be looking out for these things and communicating with your CPA about them.

Does your financial advisor talk to you CPA? If not, we at Wealth Management Solutions can provide you with a checklist of the most commonly missed tax planning items to see if you are missing out on any opportunities. Call us today at (949) 475-9700 or email info@wms-llc.com to request your free checklist or a complimentary review of your tax return.

About Richard
Richard Riva, the founding partner of Wealth Management Solutions, helps families advance their purpose in the framework of family financial matters. He brings comprehensive experience in banking, trust and investment services, and as an independent financial business, the passion in helping people and families, as a trusted advisor.


All investing involves risk including loss of principal. No strategy assures success or protects against loss.

The opinions voiced in this material are for general information only and are not intended to provide specific investment advice or recommendations for any individual.

Traditional IRA account owners should consider the tax ramifications, age and income restrictions in regards to executing a conversion from a Traditional IRA to a Roth IRA. The converted amount is generally subject to income taxation.

This information is not intended to be a substitute for specific individualized tax advice. We suggest that you discuss your specific tax issues with a qualified tax advisor.



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