Why We Ask For Your Tax Return

One of the key pieces of information we ask our clients for each year is their income tax return. The tax return provides information that may be used in your financial planning and investment management, and it can alert us to changes and opportunities.

Tax-aware Investment Management

With a clear picture of your tax situation, we can manage your investment portfolio with the goal of increasing your after-tax return in mind. For instance, we may locate tax-free investments or more tax-efficient investments in your taxable accounts and the less tax-efficient investments in your tax-deferred accounts, where tax efficiency is irrelevant. We can also actively manage capital gains and capital losses over the course of the tax year. If you are carrying taxable losses forward from the previous year, we can “harvest” them to take advantage of the tax benefits.

Proactive Tax Planning

Our review of your tax return can reveal changes in your situation that may open up new tax planning possibilities or warrant a change in your financial planning or investment management.

Charitable Giving

If we see that you make substantial donations to charitable organizations, you may be able to leverage the tax advantages available for charitable giving. For example, by donating appreciated securities, you can avoid the capital gains associated with liquidating the securities.

Retirement Plans and IRAs

Retirement plans ands IRAs offer the opportunity to reduce current income and your current tax bill, or to avoid future taxes. They may also have asset protection and estate planning features that can make them beneficial. With a clear understanding of your tax situation, we can help navigate the rules and restrictions, and compare alternatives.

Business or Trust Entities

Your tax return may contain information about business entities, trust entities, or investment entities such as limited partnerships. With an awareness of these entities, we can integrate them in your financial planning, and help you navigate alternatives and opportunities.

Coordination with your Tax Advisor

We work as a team with your tax preparer to coordinate tax planning, financial planning, and investment management for your benefit. We make sure your tax preparer’s input is being sought when planning actions that may have substantial tax consequences.