Why I Review My Clients’ Tax Returns Each Year
After the rush of April 15th, most people breathe a sigh of relief and forget about their taxes until next year. But what if that annual document holds clues to significant financial gains you could be missing out on?
This year, I wanted to share the real reason why I dedicate time to reviewing my clients’ tax returns, year after year.
In this quick video, I explain why annual tax return reviews are a critical step where we identify tax-saving opportunities and optimize your financial strategies for the entire year.
Watch now!
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Transcript
Here’s a simple question. When was the last time your financial advisor actually reviewed your tax return? If you’re not sure, that’s a problem.
Hi, and welcome back. I’m Joe Dowdall with Worth Asset Management, and right now I’m collecting my clients’ 2024 tax returns. I’m digging into those numbers because that’s one of the most important things I do for my clients each year. Today I want to talk to you about why having your financial advisor review your tax return is so important.
Why Tax Returns Are More Than Just Paperwork
Tax returns aren’t just paperwork. They tell the story of your finances, and if your advisor isn’t reviewing them, they may be missing critical information. These are some of the more common mistakes I see when financial advisors skip this important step.
Common Tax Filing Mistakes That Cost Retirees
Missed deductions or credits that could actually lower your tax bill; income reported incorrectly or losses left unclaimed; overlooking how taxable income impacts retirement contributions and planning; or ignoring warning signs that could lead to penalties or unexpected tax bills. Make no mistake, these are not small issues.
Overlooking these critical items can have a major impact on your financial situation. What’s the biggest added value to having your financial advisor review your tax return every year? It’s the information that I find to help my clients make smarter financial moves now and prepare for what’s ahead. So here’s an example.
A Real Example of Finding Roth IRA Conversion Opportunities
I was reviewing a client’s 2024 tax return recently, and we’ll call her Linda. One thing jumped out at me. Linda’s taxable income in 2024 was much lower than usual. She had retired mid-year, so her overall income for 2024 ended up falling into the 12% tax bracket. That opened up a huge planning opportunity in 2025. Based on that return, I realized we could potentially do a Roth IRA conversion in 2025 and still stay in that low-income tax bracket.
How Proactive Tax Reviews Help Avoid Higher Future Taxes
By moving some money from her traditional IRA to her Roth IRA, Linda could pay taxes at a relatively low rate now and avoid those higher taxes down the road. She had no idea that this was even an option because her CPA had just filled out the return and moved on. That’s the value of having a financial advisor review your return. Finding tax-smart strategies that help make your money last longer in retirement.
Why Annual Tax Return Reviews Matter for Retirement Planning
So if you’re a current client of mine, you can assume that I’ll be asking for your tax return each year. And if your current advisor isn’t reviewing your tax return annually, it’s worth asking, what might they be missing?
Let’s start with a quick 15-minute call to see if tax-smart retirement planning is right for you. You can reach me at 469-423-1989 or at joe@worthassetmgmt.com.