4 Reasons Your Financial Planner and CPA Should Be Working Together

Posted by Todd Doe on Oct 27, 2020 7:30:00 AM
Todd Doe

Are your financial planner and CPA working together as a team on your behalf? For many people, this isn’t the case—but it should be. By incorporating tax planning into your investment strategy, you can make better informed decisions to maximize your dividends while maintaining tax efficiency.

Below are 4 benefits of having a coordinated advisory team:

  1. Tax Impact of Investments
    When building your investment portfolio, there are several important tax issues to consider, including Alternative Minimum Tax (AMT), and Social Security Tax. If you are paying AMT, interest from normally tax-exempt private activity bonds could be taxed at a high rate. Likewise, investment income can impact the taxation of your social security benefits. By weighing the tax ramifications of potential investments, you can minimize your tax liability.

  2. Estate Planning
    Many financial planners incorporate life insurance into their clients’ financial portfolios as a tool for estate planning, however those who work with a CPA to forecast estate taxes can also create strategies to minimize tax liability.

  3. Real Estate Decisions
    When contemplating a real estate purchase or rental, there are several tax implications to consider. Taxable income generated within your investment portfolio can be leveraged, along with deductions such as mortgage interest and real estate taxes, to support your real estate decisions.

  4. Required Minimum Distributions
    For anyone with an IRA, SIMPLE IRA, SEP or 401(k), the IRS generally requires you to start taking required minimum distributions (RMDs) annually at age 70 ½. Your financial advisor and CPA can help you strategically determine when to start taking RMDs based on your expected income, in order to minimize tax impact.

By addressing issues as a team, your financial planner and CPA can help you minimize your tax liability and maximize your dividends. Do your financial planner and CPA work together? Leave a comment below, or feel free to contact me directly, I’m happy to help!

Topics: Accounting, Wealth Management, Business Advisory