What Should I Be Asking My CPA About My Investments?

The IRS Tax Code is, as you know, not a small document, nor is it one that remains static year over year.  Given the rapid pace of regulatory changes, many people elect to employ a tax professional to annually help navigate the process and make sure that deductions afforded to you are being taken advantage of.  While many of your tax professionals have probably already asked you the following questions, we thought it would be helpful to remind you of some good topics to discuss.  If you haven’t had a discussion with your CPA about these items, it may make sense to ask and see if there’s any additional tax savings available to you:

  • Can/Should I be Contributing More to A Retirement Account? We often get the scenario where a client has some excess money built up in their savings and asks us what to do with it, and often the first place we like to look are retirement accounts.  The benefits of tax-advantaged retirement accounts are hard to pass up, and the IRS Code around who can contribute, when, and how much is not the easiest thing to understand.  Your tax professional will be able to evaluate your situation, what plans you have access to at work, whether there’s an opportunity to fund an IRA or SEP/SIMPLE IRA (for the Self-Employed), and whether you’re “phased-out” from making any contributions.  Often times, they can run a simulation for you showing the difference between contributing and not contributing, which can redirect money from Uncle Sam’s pocket into yours.
  • Is There An Opportunity For Me To Take Advantage of A Lower Capital Gains Bracket? While this is not as common, in some cases individuals might find themselves in fairly low tax bracket in years between retirement and starting social security income.  Individuals who choose to delay their social security benefit and live off after-tax assets in the meantime could take advantage of light taxable income years by selling low-basis investments they’ve been hanging onto.  If they can stay at the 15% tax bracket, their capital gains tax rate is 0%.  It’s difficult to pull off, but with good planning it can be a fruitful exercise.
  • Are There Other Tax-Advantaged Tools I Should Be Taking Advantage Of? It’s always good to have a quick refresher, particularly around benefits enrollment time in Oct/Nov, of what company benefits are available to you and whether they can help your tax situation.  Having access to benefits like a Health Savings Account (HSA) and Dependent Care Flexible Spending Account (FSA) are ways to re-route money that would otherwise get taxed and spent on medical and dependent/childcare into a tax-free manner if used appropriately.
  • Are My Investment Advisory Fees Deductible? If you itemize on your taxes, some fees may be deductible. The IRS is very specific about which fees paid on your investments can be used as a deduction, but some indeed are. It’s not as common for fees within IRAs to be deductible, but fees paid directly to investment advisors from after-tax (“non-qualified”) investment accounts may be.  Most fees that exist in mutual funds are buried in the expense ratios, which are not usually deductible.
Any tax advice contained herein is of a general nature. Further, you should seek specific tax advice from your tax professional before pursuing any idea contemplated herein. Fee-Based Planning offered through W3 Wealth Advisors, LLC – a State Registered Investment Advisor – Third Party Money Management offered through ValMark Advisers, Inc. a SEC Registered Investment Advisor – Securities offered through ValMark Securities, Inc. Member FINRA, SIPC – 130 Springside Drive, Suite 300 Akron, Ohio 44333-2431 * 1-800-765-5201 – W3 Wealth Management, LLC and W3 Wealth Advisors, LLC are separate entities from ValMark Securities, Inc. and ValMark Advisers, Inc.

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