Tax Planning and Your Investments

‘Tax planning’ is left to federally-authorized tax practitioners. They prepare tax returns and defend clients pursuing relief from federal agencies for their own tax payments. They also dispute tax payment errors. Financial advisors don’t provide tax advice. They provide information on the tax consequences of specific investments they sell or recommend to clients. This type of advice is within the scope of financial planning. Some financial advisors are CPAs (Certified Public Accountants) or have the CFP (Certified Financial Planner) designation and can prepare tax returns for their clients.

Value of an Advisor

Financial advisors without these certifications can provide advice on a number of financial situations. We can also provide the tax consequences to the client. Financial advisors provide advice on pension and retirement savings contributions and distributions. In addition to purchasing life insurance or annuities and other investments.  Always providing the client with relevant tax information for each. Additionally, financial advisors can provide advice on work-related income. Advice on pre-tax and tax-deferred savings options and the effects on personal income now and at the time of distribution. Advisors are able to provide tax information on the financial products they sell to their clients. Only when it is within the scope of their professional licensing and the client’s financial planning.

It is common for financial advisors to request copies of a client’s tax returns even if they don’t prepare the tax return. What do advisors look for in their client’s tax information?

Income and Capital Gains Taxes

Income and Capital Gains Taxes- Advisors look for income in your portfolio, whether it is from qualified dividends, ordinary dividends or tax-free income. Your tax bracket helps determine what types of investments are best suited for your portfolio, both for growth and from a tax savings perspective. You may have carry-forward losses from a bad year which will off-set growth from another investment. A lot can be determined by reviewing your tax return. 

Missed Deductions and Opportunities

Missed Deductions and Opportunities- It’s common for clients to miss out on deductions they could be taking or maybe their accountant wasn’t aware they could take. These could be as common as payroll deduction for W-2s being filled out incorrectly, missed deductions for college savings plans, long-term care premiums (if they exceed 7.5% of your adjusted gross income) and health insurance if you’re self-employed.

When people retire, they are in a lower tax-bracket their first and possibly second year of tax filing. There may be an opportunity to convert taxable investments to tax-free investments with lower tax consequences than if they liquidate and may higher taxes later. Investing in a donor-advised fund to harvest the deduction on a tax return may benefit clients.

We highly recommend working with tax practitioners pertaining to your investments and how they affect your tax situations. If you have any questions on what tax-planning advice financial advisors can provide in regards to investing, please feel free to contact our office anytime.

Additional Disclosure 

These are the opinions of the author and not necessarily those of the Registered Investment Adviser or Broker/Dealer. They are for informational purposes only. Do not be construe or act upon these opinions as individualized investment advice.


For those who are looking for financial advice, we realize the available options are many and deciding who to work with is a challenging problem. At Ward and Associates Financial Group, we know that it is your retirement, and you should have control over it. We offer our experience and knowledge to help you design a custom strategy for financial independence. Contact us today to schedule an introductory meeting!

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