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  • Writer's pictureJayson M. Thornton, CFP

Do Financial Advisors Prepare Tax Returns?

Updated: Feb 12



Taxes can be among the most complex, confusing financial issues you face. From counting deductions to claiming tax credits, it’s easy to get lost in the forms to fill out, dense terminology and documentation needed. Fortunately, many financial advisors work specifically in taxes to help clients with these issues and more. They can answer your questions, put tax issues to rest and help you get the most from your tax return. If you need financial and tax services then some financial advisors can help.


Financial advisors specialize in a range of subjects, and many help their clients with taxes. Clients can look to financial advisors for assistance with all their tax needs, such as filing tax returns, receiving individualized tax planning and guidance and settling tax problems.


To better help their clients, most financial advisors who work with people’s taxes earn certifications such as certified financial planner (CFP) and certified public accountant (CPA).


Pros of Working With a Financial Advisor Offering Tax Services


A financial advisor with specialized tax credentials can offer you numerous services for your convenience. Instead of working with multiple professionals, you can get tax assistance, retirement planning and more from one advisor or firm. Therefore, you can streamline the financial services you need by working with fewer professionals.


How Taxes Play a Role in a Financial Plan


While everyone has to pay taxes, a financial advisor can help you understand how taxes impact your financial circumstances. Tax planning and financial planning interlink because the amount you pay in taxes influences your ability to meet your financial goals. In turn, your income impacts how much taxes you owe.


For example, how much you contribute to a pre-tax investment account could reduce your taxable income when you file. Additionally, selling investments at the proper time can help you avoid costly tax payments or take advantage of an asset that is losing money. A financial advisor can go into detail with you about the best strategy for your finances.


By creating a thorough tax plan, you can grow your savings and set yourself up for a stable retirement. On the other hand, if you don’t account for taxes, you can leave significant money on the table. A financial advisor will help you make the most of your tax situation.


Tax Certifications for Financial Advisors


Financial advisors can acquire several certifications to enhance their tax skillset. Aside from the already mentioned CPA and CFP, advisors can also earn additional credentials. These certifications indicate industry knowledge, experience and dedication to work with integrity.


Advisors can become enrolled agents (EA) with the IRS. The IRS grants enrolled agents the right to represent taxpayers to the federal government and they have expertise in all tax-related matters.


Tax Services Financial Advisors Offer


Clients who approach financial advisors for tax help usually have questions and challenges to address or need help preparing their tax returns. A financial advisor’s job is to help clients obtain the biggest tax return possible and put that money to work to achieve their financial goals. As a financial advisor gets to know a client and their financial situation, they can help the client set financial targets and create a realistic plan to achieve them.


Financial advisors help clients with challenging tax situations by reducing liabilities and untangling complex tax problems. Consequently, even clients who end up owing taxes after filing can benefit from visiting a financial advisor.


The Bottom Line


If you have tax questions or need tax help, a financial advisor with a CPA or EA certification can help. Thus, financial advisors specializing in taxes can also help you create an individualized financial plan. They can also recommend how your tax return can help you accomplish your financial goals.


However, just because a financial advisor can offer tax services doesn’t mean you should use them. It’s important to evaluate your best options and speak to the financial advisor about what your needs are.


Written by Ashley Kilroy

Edited by Jayson M. Thornton, CFP

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