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Guest Blog Post: Top 12 Things Financial Planners Look For on a Tax Return

Posted by Emily Taibl on May 22, 2018 6:29:22 PM

by Colleen Kroeger, CFA Highland Private Wealth Management

It’s likely that you will be receiving last year’s tax return from your accountant sometime soon. If you have a proactive financial advisor, they will likely ask for a copy so they can review to update your financial plan for the coming year. We sat down with Colleen Kroeger of Highland Private Wealth Management to find out what financial planners look for and why.

As a financial planner, there are many things we look at on a tax return to ensure our clients are taking advantage of opportunities and avoiding surprises. Below is a list of 12 things that are important to notice:

  1. IRA distributions. Can you minimize income taxes by using some combination of IRA, Roth and taxable account withdrawals to support cash flows?
  2. Itemized deductions. Does it make sense to still have a mortgage? Are gifts being maximized? How does your cash versus stock gift mix work? Would it be better to do large gifts into a Donor Advised Fund vs. giving to charity annually? If there are no medical deductions and we know you had a big medical year, is it worthwhile to calculate expenses?
  3. Carryforwards. Is there a capital loss carryforward we can use to better position the portfolio this year? Likewise, is there a charitable gift carryover that we need to generate income to use before it expires?
  4. Review W-2s. We do this to make sure you are maximizing retirement contributions, that health insurance is pre-tax, and all HSAs and FSAs are being optimized. We also look to see if your disability insurance premiums are paid pre-tax or after-tax as it is best to pay with after-tax dollars so the benefit will be tax free.
  5. Small business/consulting businesses. If income is high, evaluate whether it makes sense to convert to an S corp to save on Social Security and Medicare taxes. Also, we want to see that SEP or 401k contributions are being maximized.
  6. Creating income. If income is low, does a partial Roth conversion make sense to save taxes later? Or, should you realize more gains to take advantage of the 0 and 15% capital gain rates? We also determine whether taxable or tax-free bonds or some combination is best.
  7. AMT situation. If client is in AMT, it impacts the types of bonds we invest in and helps us know what income/deduction strategies are appropriate. Further, if there are incentive stock options, we want to manage those carefully with the CPA to preserve optionality. Understanding the AMT crossover point is important for us to know.
  8. Children’s earned income. Do your kids have earned income? Can you support helping them start to save for retirement, by starting Roth IRAs?
  9. Relatives. Are you financially supporting a relative? Can/should you claim them as a deduction?
  10. Avoiding Surprises: Check to see how close income is to losing certain benefits and manage accordingly. For example, if on Medicare, your premiums can more than double if your AGI exceeds a certain amount.
  11. Account consolidation. If there are many accounts listed on Schedule B or D, see if there is opportunity to combine like titled or purposed accounts such as if they have multiple banking or brokerage relationships to simplify.
  12. Social Security. It is important to make sure you are maximizing your social security income. Look at who is claiming and what. For example- how does claiming your own benefit versus a spouse or former spouse’s affect the final number?

It is important to look at your tax returns as part of your larger financial picture and plan. When yearly tax planning is aligned with your long term financial plan, you can keep much more of your hard-earned money in your pocket. Therefore, having your financial planner and CPA conduct yearly tax planning meetings is almost always money well spent. We typically interact with our client’s accountants for planning purposes after we receive the finalized return and at year end after most of the current year income is known.

Colleen Kroeger has over 17 years of experience in wealth management and has served Highland clients for over a decade. She particularly enjoys helping clients with complex personal financial situations find clarity and peace of mind. Colleen’s expertise is in serving executives and their families and she also enjoys working with the next generation of wealth. Colleen’s particular strengths include executive compensation planning, portfolio management, retirement planning, tax planning, estate planning and charitable gifting strategies.

Are you ready to invest in a life fully lived?  Contact Colleen Kroeger at Highland Private Wealth Management at (425) 739-6500 or visit




Topics: Tax

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