Paying too much in taxes? Find a tax-focused financial planner

The following post is shared content from the Alliance of Comprehensive Planners. 

Tax-focused financial planning is not just for the one percent. On the contrary taxes are the hub of the financial wheel with consequences to virtually all financial decisions. Under-planning and overpaying simply delays financial independence. So, why don’t more Americans engage in tax-focused financial planning?

The disconnect between financial planning and tax planning is costing American taxpayers dearly. Aside from the many who intentionally allow higher withholding throughout the year just to claim a sizeable refund in April, are those who overlook the tax implications of their retirement distributions, investment allocations, estate planning decisions or education savings. All have tax liabilities attached, either in the short or long term.

Accountants and tax preparers might identify those consequences in hindsight, when it’s too late to avoid tax penalties. And, financial advisors,who often simply state, “consult your tax advisor” are just washing their hands of the tax consequences of their advice, leaving it up their client to connect the dots. Indeed, it is this short-sighted, often rear view, of taxes as a once-a-year task, rather than a pervasive feature of financial life, that makes the tax-focused financial planner uniquely positioned to advise clients in all aspects of their financial lives.

“All aspects” is a hefty claim. Yet, tax-focused financial planners are informed not only by their clients’ financial profile, but also by the real context and implications of their advice. Cash flow and financial behaviors, the expectations for children and demands of aging parents, job security and income growth are as important as retirement planning, investment strategy and the tax consequences for the all-of-it. It’s holistic. It’s fiduciary based. And, it’s decidedly uncommon.

Focusing on history, is as bad as ignoring it, and tax preparation is often just that: passive and backward-looking. Tax planning is anticipatory, active and looks forward, sometimes even beyond the current year to future years.

Those knee-deep in regret over the tax return they’re filing in April, might reconsider their approach for 2017. With a tax-focused financial planner, planning for their 2017 tax return would already be underway.

To read more on the subject of tax-focused financial planning check out the Tax Alpha White Paper written by fellow ACP Advisors Jonathan Heller and Robert Walsh (edited by Bluestem’s very own Karen Folk and Jake Kuebler). For more information on the Alliance of Comprehensive Planners visit their website at