Date: Jul 07TH, 2022

For Maximum Benefit, Introduce Your Accountant and Your Financial Advisor

Do your tax advisor or accountant and your financial advisor know one another? When it comes to your personal finances, they probably should. Both may have a lot of guidance for you, but working together, they can help tailor that guidance to give you maximum benefits, particularly come next year’s tax time.

Let’s look at several scenarios in which the sum of knowledge from both your accountant and your financial advisor could benefit your personal wealth.

Weighing the benefits of taxed or tax-free investments.

Depending on your personal situation, it might make more sense to invest on a pre-tax or after-tax basis. While this is certainly true for individual retirement accounts (IRAs), it can also be true for other elements of your portfolio, including the alternative minimum tax and determining how much of your Social Security will be taxed based on your income. If you are on the cusp of these scenarios, according to Kiplinger, your investment decisions about producing investment income could have a significant impact on the availability of tax credits and the taxation of your Social Security benefits.

Should you own or rent?

While conventional wisdom has always proclaimed that property ownership is the sounder decision compared to renting, this is not the case for everyone. While it’s true that mortgage interest is tax-deductible and rent is not, your level of taxable income, your effective tax rate, and whether you use the standard deduction or itemize will affect how much this deduction is worth to your personal financial portfolio.

Estate Planning

The current federal estate and gift tax exemption limits will determine what taxes your heirs will pay on your estate after your death. If handled properly, it’s possible to minimize the impact of estate taxes, allowing heirs to pay no federal estate or gift tax.

“Your adviser and CPA should work together to project the expected size of your estate, the potential federal estate tax liability, and any anticipated state estate taxes,” advised Bryan Koslow for Kiplingers.

Putting capital losses to work.

While no one likes to be faced with investment losses, the truth is that they can come in handy during tax time. Capital losses can be “saved” to offset capital gains in future tax years. They cannot be passed on to your heirs, however, so it makes sense to seek advice from professionals about using them advantageously during your lifetime.

When to take IRA disbursements.

While individuals are able to begin taking disbursements from their IRA accounts at age 59 and a half, the IRS requires you to begin taking minimum distributions annually when you turn 70 and a half. As with all financial moves, there is a strategy behind when and how to take these disbursements that your accountant and financial advisor working together could help you craft to your best advantage.

Learn how Arizona-based Prime Wealth Advisors’ full-service retirement planning, tax services, estate, and wealth management can help you ensure your retirement funds will last for your lifetime. Call 623.77.PRIME for more information.