This is the first in a series of blog postings from advisor Mike Patton on how he works with clients during tax season and throughout the year to maximize his value to clients on tax planning. Future blogs in the month of March will include postings on tax aware investing See AdvisorOne's Special Report on the 22 Days of Tax Planning Advice for 2012, with separate articles on each business day of the month to help you with your tax planning efforts for clients and yourself.
As we approach tax return filing time, there are opportunities for advisors to add value, even if you're not your client's tax preparer. In this post, the first in a series of blogs, I'd like to share what I am doing during this season for my clients.
Item No. 1: Checking Clients' 1099s
Clients should have received their 1099s by now. Although most will contain all of the necessary data, believe it or not, there are a few firms that do not include the cost basis for securities sold. In fact, the custodian that I use 'had' a relationship with one such clearing firm. This firm, which shall remain unnamed, showed the gross proceeds, but not the basis. To remedy this, I would export the 'gains and losses' for the calendar year into an Excel spreadsheet. Then I would send this to the client's tax preparer. Because it was in Excel, it can easily be sorted by capital gain treatment, position, etc.
Item No. 2: Checking Clients' Returns
I sent out an email to all financial planning clients recently requesting a copy of their 2010 tax return and their 2011 return when completed. In an effort to become more involved in this area, and to assist in identifying errors and ways to save, clients were very appreciative. After all, to maximize cash flow, you must either increase income or reduce expenses, or both. And the more free cash flow, the greater the potential for wealth accumulation.
