The Unique Value of Tax Planning with a Financial Advisor

By relying on your financial advisor for tax planning services, you can unlock unexpected value. 

Published March 24th, 2021

Reading Time: 4 minutes

At the beginning of every year people put off the inevitable, waiting for the dreaded tax day to arrive. Websites like TurboTax and Credit Karma can help simplify the process and guide you through the steps of filing. However, while these websites and tax software platforms are helpful, they are not designed for the complexity and specificity that comes with many tax situations. This means that you could be leaving a lot of money on the table if you are not aware of all the ways that you could save on your taxes. Even worse, you could get penalized by the IRS if you file incorrectly. 

This is why having an experienced tax financial advisor is such an asset when filing your taxes. An experienced tax professional can help you keep as much money as possible in your pocket and ensure that you do not face any penalties from the IRS.   

What is a Tax-Focused Financial Advisor?

The term “Financial Advisor” is used by many individuals that all serve different purposes. Depending on their experience and certifications, financial advisors may specialize in retirement planning, investing, tax planning, and many other fields. When it comes to finding a quality tax financial advisor, you should look for an advisor that specializes in tax preparation. 

Typically, tax advisors, also known as tax consultants, will fall into two categories: certified public accountants (CPAs) and enrolled agents. CPAs are licensed by the state in which they practice and must meet education requirements, experience requirements, and pass an extensive exam. 

Enrolled agents are licensed by the federal government and are allowed to represent clients in any dealings with the IRS. They are specially trained tax agents and must pass a comprehensive test from the IRS and the annual requirements necessary to keep their credentials. 

Why Do I Need a Tax Advisor?

The United States tax code is 2,600 pages long, or 3.7 million words! As you can imagine, those pages  contain tax breaks and tax penalties that the majority of Americans are completely unaware of. Some of the instructions for a single tax form are over 200 pages long. Hiring a professional that is familiar with the U.S. tax code can help make you aware of all of your options when it comes to optimizing your tax situations. 

Many people never even consider hiring a tax financial advisor because they assume it would save them more money to file their taxes themselves. However, in many cases, an experienced tax professional can save you much more money on your taxes than it costs to hire them. They are also available to offer you advice throughout the entire year, which can help you make smarter decisions and plan ahead to optimize your tax situation. 

What Kind of People Can Benefit from a Tax Advisor?

There are several situations in which one could benefit from the wisdom and knowledge of a qualified tax professional. If you have multiple streams of income, such as from multiple jobs, investments, real estate transactions, and/or rental income, a tax financial advisor can help you assess your total income and find ways to protect your income from being eaten up with unnecessary taxes. 

Another example of someone that may benefit from hiring a tax financial advisor is a small business owner. They would not only be able to help you with your own individual income tax, but they could also be a major asset when handling your businesses’ taxes. 

Anyone who has experienced a major life change would also likely benefit from the help of a tax advisor. If you have relocated to a new state, purchased a home, experienced a divorce, or experienced any other life change, your financial situation has probably changed as well. If this is the case, it is important to make sure that you are aware of any additional taxes or tax breaks that you may be subject to.  

Lastly, anyone that is already facing tax issues could greatly benefit from hiring a tax advisor. Tax advisors not only can help you avoid difficult tax situations, but they can help you get out of situations that you may already be in. Enrolled agents can help advocate for tax debt relief solutions, and also represent you in court if needed. When dealing with the IRS, this could be invaluable. 

How Do I Choose a Tax Advisor?

When it comes to finding a financial advisor, it is important to find an advisor that you trust and are comfortable sharing the specifics of your financial situation with. It’s also important to make sure that you find an advisor that meets your specific needs and can help you achieve your financial goals. So, if you are looking for a tax advisor, you should make sure that the advisor specializes in tax planning and preparation. It’s important that they can offer you the best advice possible.

For those looking for a high-quality, trustworthy tax financial advisor, Zoe Financial is an excellent resource. Zoe uses a matching algorithm to connect you with a network of trusted advisors that meet your specific financial needs. Zoe only allows the top 5% of fiduciary advisors in the country to be a part of their network, helping weed out any salesmen and untrustworthy advisors. To get connected with high-quality tax advisors in your area, simply answer a few questions at no cost to you and get started achieving all your financial goals.  D

Disclosure: This blog is not investment advice and should not be relied on for such advice or as a substitute for consultation with professional accounting, tax, legal or financial advisors. The observations of industry trends should not be read as recommendations for stocks or sectors.

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