Dec 14, 201610:27 PMFinancial Perspectives
with Michael Dubis, CFP
Year-end tax ideas — be careful about speculating on Trump’s policies
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It’s time to start making year-end tax plans. There is a lot of opinion and speculation on President-elect Trump’s policies and I think some investors are making decisions without knowing for sure what the actual policies will be. We’re a long ways away from actual law changes.
I think it is speculative to assume Trump will pass all of his proposed tax law changes. Further, if you are trying to manage year-end, don’t just rely on us “financial planners” for pointed tax advice. While we do have training in this area and we’re grateful we can be of service this way, it doesn’t qualify any of us as a dedicated tax-advisor unless we’re certified and most importantly experienced in specific tax advice. Experience requires a lot of attention and time to this very granular discipline. Normally that’s best found with a CPA (certified public accountant) and/or EA (enrolled agent). Given the potential complexities between this year and next year, working with a qualified tax advisor is important.
Here are some practical reasons why I personally don’t/won’t serve as the dedicated tax advisor to my clients, and why I think it’s very important they have their own tax advisor separately — but coordinated — with their financial planning advice:
- A firm like mine simply wouldn’t have the infrastructure in place. Dedicated tax advice is both intellectually and technologically capital intensive. Similarly, a dedicated tax firm usually lacks the infrastructure for what people like myself do, which is why most qualified tax advisors don’t attempt to be both a tax advisor and financial planner; they’d be spread way too thin.
- Tax law changes over the past decade have made tax preparation and analysis exponentially more complex. Tax detail and advice requires full-time concentration. Further, the professional standard of care a tax attorney, CPA, or EA offers is specific to tax advice and is much higher than that of a certified financial planer (CFP).
- Only a qualified tax advisor, like a CPA or tax attorney, can properly represent you in an IRS tax audit. Having an existing relationship with a CPA or tax attorney would be invaluable if an audit occurs.
- Further, if you work with a tax attorney, you also get client-attorney privilege of confidentiality, which a CFP like myself, or even a CPA, cannot provide. This is a critical benefit if you might face any legal questions in your tax advice. Your financial advisor and even CPA should never be giving you legal advice, especially sensitive confidential advice.
- Finally, and something that’s a core house philosophy of mine: You simply should have multiple, independent, professional “voices” working as a team to help you with your wealth. Ideally, I think separate, independent (i.e., not conflicted) firms should provide these services.