Taxes are a central component of financial planning, and advisors are frequently called upon to provide guidance on tax strategies. However, the issue is that there are very fine lines between tax advice and simply providing guidance on a client’s taxes, and crossing that line can open up a host of legal and financial liabilities for both the advisor and their firm. This article is intended to help advisors better understand those issues and gain a framework for how they can guide their clients on tax-related matters without crossing the line into “Tax Advice.”
Most people are familiar with filing an income tax return, but few are aware of the wide range of services that professional tax advisors can offer. These advisors are able to help with much more than just filing a return; they can also make recommendations for how individuals can reduce their taxes in the future by taking advantage of opportunities like deductions and credits.
The qualifications for a career as a tax advisor vary, and some professionals have formal degrees in accounting or the IRS while others have experience working in other areas of business before becoming a professional. There are four types of certified tax advisers: CPAs, tax attorneys, enrolled agents (EAs), and financial advisors. Each of these designations requires licensure, education, and work experience. They all work under the umbrella of Circular 230, which is a combination of regulations, ethical/conduct provisions, and disciplinary procedures.
While many people file their taxes on their own, tax season can be a stressful time of year for those with complex and varied investments or multiple jobs. Having access to professional tax advice can be helpful, especially for those with complicated investment portfolios. A good tax advisor can save you a lot of time and stress by helping you find the right strategies for your specific circumstances.
A financial advisor can help you maximize your retirement savings by recommending tax-efficient strategies. These may include investing in retirement accounts, converting assets to Roth IRAs, and deferring income. These strategies may not only save you money on your taxes, but can also ensure that you’re paying the lowest possible amount of taxes.
Taxes are a huge part of everyone’s lives, and they can have significant impacts on your bottom line. By leveraging professional tax advice, you can minimize your tax liability and increase your refund each year. By using a platform like Bench, you can connect with a qualified tax advisor to learn more about your individual tax situation. The platform has also been used by more than 1,500 employees to model potential tax scenarios based on their company’s cap table and equity grants, and has a nearly perfect 4.9 customer satisfaction rating. Schedule a demo today to see for yourself how the platform can benefit your business. Steuerberatung