Midyear Tax Planning for Financial Advisors
There is a fantastic opportunity for advisors to add value for their clients by checking in midyear and reviewing a pay stub to make sure their clients are on track.
Even though the filing deadline for 2022 tax returns is in April of 2023, there are deadlines that come earlier that sometimes go forgotten. The tax industry has done taxpayers a huge disservice by referring to February and April of each year as “tax season”. That period has essentially turned into the only time of year that people tend to think about taxes.
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When Congress changes federal tax law, it always dominates the headlines, but the IRS' portion of a taxpayer’s income is only part of the story. Every state has their own unique set of tax rules, and it is not enough for financial advisors to be versed in the rules of their home state. Eight states have no individual income tax. For the other states, there are 42 different sets of rules on what type of income is taxed, how it is taxed, at what rate it is taxed and whether where you work or where you live is more important. Then one could wade into local taxes, with nearly 5,000 jurisdictions in 17 states imposing a local income tax, which can treat nonresidents differently than residents.
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