The earlier in the year you have a sit-down with clients to discuss 2015 tax planning opportunities, the more likely they will be able take advantage of them before it’s too late. Also, having a tax-planning session mid-year, instead of just as the filing season begins, underscores the message that your value to clients is as a tax (and perhaps also investment) strategist, not simply a tax return preparer.

“There are four main areas of family tax planning that accounting professionals can work with their clients on,” according to Chad Smith, a Wealth Management Strategist for HD Vest Financial Services:

1. Retirement planning;

2. Education planning;

3. Beneficiary and titling planning; and

4. Income threshold planning.

“Survey after survey reminds us that most Americans are behind the eight-ball when it comes to retirement saving,” Smith said. “Although it is generally a good idea to be a gentle nag to your clients, your knowledge of their entire financial situation puts you in a better position to provide guidance than the people promoting the 401(k) plan where they work,” he added.


Make statistics meaningful

Often, clients are just told that if they save X dollars a year, they’ll wind up with Y dollars when they retire. But what does that really mean? To most clients, not much. A useful retirement planning discussion begins with the question, “Have you thought carefully about what retirement looks like to you?”

When the client is able to produce an answer, you can then explore what it might cost, how much has been set aside to fund that retirement, and the funding requirements ahead to make their dreams a reality.

From that point forward, your conversations with your clients can have more impact regarding retirement funding vehicles, whether they be employer-sponsored 401(k) plans and pensions, or do-it-yourself IRAs (including Roth IRAs, annuities, and taxable investment accounts),. That’s because the specific purpose and strategy behind each option has been placed in a meaningful context for your client.

Even so, however, your client’s progress will need to be monitored annually, if not semi-annually.

Education planning

Education planning is also vital to parents and their college-bound children. Discussing the tax-favored 529 Plan opportunity is a natural for accounting professionals. That discussion may be as suitable for parents of young children as for grandparents.

“I tell parents, ‘Your parents love their grandchildren more than they love you,’” Smith said. “They laugh, but many see an element of truth to it,” he added. This can set the stage for you to begin working with your clients’ parents, for the ultimate benefit of your clients’ children.

Beneficiary and titling planning offers an opportunity for accounting professionals, with a minimal time investment, to provide a basic estate planning service. “When you’re discussing clients’ overall situation, you can ask about whether anything has changed in their life that would impact where they want their assets to go should anything happen to them,” Smith said.


Managing change

Things change. People get married. People get divorced. Spouses die. And sometimes those changes occur soon after tax season, so you might not be aware of it for another year if you don’t check in with your clients outside of tax season. “I know of a case in which a man died and his investments went to his ex-wife because he never retitled them after the divorce,” Smith recalled.

While it’s unusual for such a matter not to have been addressed during divorce proceedings, it can happen. More probable is that a client’s attorney put an irrevocable trust in place for estate tax planning purposes, but neglected to retitle assets accordingly. If you aren’t handling your clients’ investments, but would like to, this scenario also gives you an opportunity to demonstrate that you are perhaps better suited to the job, whereas the broker handling your client’s investments didn’t know enough to help your client be proactive on this matter.

Finally, there’s income threshold planning. As you know, the threshold for being subject to the 3.8 percent surtax on net investment income is $200,000 in adjusted gross income for single filers, and $250,000 for marrieds filing jointly. If you can project that a client’s income will come in slightly above those thresholds, you might have an opportunity to make some adjustments to help them avoid it.

For example, having your clients beef up retirement plan contributions could help. Also, reviewing taxable investment portfolios for tax efficiency could help them avoid the surtax. The same applies to ordinary income tax bracket management.

Some of your clients might come out of this mid-year tax review session without needing to change a thing. Even so, they’ll probably see you as a more valuable resource in helping them to manage their financial life than they previously had.

HD Vest Financial Services® and its affiliates (collectively, “H.D. Vest, Inc.”) do not provide tax or accounting services. You should consult your tax professional regarding the tax implications of any investments.

The views and opinions presented in this article are those of Chad Smith and not of HD Vest Financial Services® or its subsidiaries.

HD Vest Financial Services® is the holding company for the group of companies providing financial services under the HD Vest name.

Securities offered through HD Vest Investment ServicesSM, Member SIPC, Advisory services offered through HD Vest Advisory ServicesSM, 6333 N. State Highway 161, Fourth Floor, Irving, TX 75038, 972-870-6000.