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What You'll Learn In Today's Episode
  • Why W-2 vs contractor isn't necessarily a choice
  • Why great tax planning requires a great system, especially when you're self-employed
  • Key topics you need to ask clients about when they become newly self-employed.


In this week’s episode Steven is once again joined by Michael Eckstein, an enrolled agent who takes a no nonsense approach to helping his clients get taxes and business right. Steven and Michael share pet peeves on working in tax and talk about taxpayer’s obsession with the “sexy” strategies while skipping over all the basic stuff that everyone should do every year. Listen to the end as Steven and Michael share action items for improving taxpayer experiences.

Ideas Worth Sharing:

“ We also got to recognize, not just take care, recognize that this sort of simpler tax planning is good and it's good for the vast majority of clients, especially if you aren't specialized” - Michael Eckstein Click To Tweet
“Why skip to the complicated stuff when there are other things we can be doing?” - Steven Jarvis Click To Tweet
“At least you'll be able to sleep with yourself at night knowing you made a difference in your client's life.” - Michael Eckstein Click To Tweet

About Retirement Tax Services:

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Thank you for listening.

Read The Transcript Below:

Steven (00:52):

Helllo everyone and welcome to the next episode of the Retirement Tax Services podcast, Financial Professionals Edition. I’m your host Steven Jarvis, CPA, and with me this week on the show is a fellow tax professional, Michael Eckstein, and he’s rejoining the show. And I’m not entirely sure where this episode’s going to go. We’re kicking off the tax filing season. It’s probably mostly Michael and I complaining about all the things that people get wrong when it comes to taxes, but it’s going to be a lot of fun and he and I are going to have a great time and hopefully, you get something out of it by the end. So Michael, welcome to the show.

Michael (01:25):

Thank you for having me back. I’m always surprised when I get invited back onto the podcast.

Steven (01:30):

Well, I mean I’ve really enjoyed talking to you. So selfishly I like having you on. And then you and I are both really aware of this, so I don’t think you’ll be insulted when I say it, but the pool of tax professionals who I want to have conversations like this with is pretty small and so that’s why I call myself the least boring CPA and not the most exciting. The bar is very low for tax professionals.

Michael (01:53):

I can imagine, especially if you want to talk like you guys do about retirement tax and investment tax. One of the, I guess we’re just going to start complaining right now, which I’m sure your audience is probably somewhat aware of because you’ve been educating them about this, the pool of accountants that have a deep understanding of investment taxes, surprisingly low,


Right? A lot of accounts can report the basic capital sales, basic securities, mutual funds, blah, blah, blah. But once you start getting deeper into not even super complex things like Roth conversions or straddles or stuff like that, very quickly get to an area where it’s like you’re talking to other accountants and you’re like, this is not an everyday transaction for you. Nevermind. And I’ll even admit that there’s very high-level investment stuff that I do not get involved with if I think my client genuinely could be a day trader from the IRS standpoint and not from the NTD Ameritrade where you check off that you have margin account right Day trader and you’re like, which maybe I’ll explain that real quickly for the people listening at home, right? Colloquially from a non-tax perspective, when we say day trader, we mean you are an approved day trader with a margin account with your brokerage or whoever, right? The IRS does not define it the same way, right? The IRS has their trader status, which is not actually defined in the IRC it total revenue code anywhere and is defined by a bunch of audits and court cases. And that’s why if any of my clients have a legitimate chance of being a day trader, I’m like, you know what? You go talk to a true specialist in day trading. Do you guys do day trading returns? Nope. It’s a whole thing.

Steven (03:36):

It’s a whole thing. 

Michael (03:37):

There’s a lot of potential exposure on that, right? Because day trading fundamentally changes how capital gains works on the tax return and a whole bunch of other stuff. And I’m like, you go to a professional who’s willing, who’s read the court case and is willing to make the call. But to go back before my tangent, yeah, no, I understand what you mean. There are plenty of accountants that I don’t want to talk to.

Steven (04:01):

Well, and there’s fewer and fewer of us. One of the last reports I saw was that as of 2022 over the previous two years, something like 17% of the interest industry had just left, and that includes auditors and bookkeepers and tax people. So it’s not just the tax side of it, but this isn’t a super appealing industry for people to be in, even though as you’re talking about with day trading, there’s more and more complexity as we talk about crypto and state tax issues and Congress constantly wanting to use taxes as a political game piece. There’s more and more need and it seems to me love your thoughts on this. It seems like I either see accountants who focus on the, Hey, guess what? Everybody, the mileage rate went up and the contribution limit went up and that’s all you need to know about taxes ever. Or it’s the other end of the spectrum where it’s, Hey, we should set up intentionally defunct trusts in The Bahamas so that you never pay taxes again and then you can move to Puerto Rico and then there’s nothing in between for all of us. Reasonable people.

Michael (05:03):

I have so many thoughts on this and I think this is actually what inspired this recording was that tax planning gets a weird rep on the internet. Like you said, the content you can find about taxes if it’s coming from accountants is one of those two extremes. You got people being like, oh yeah, the mileage rate went up 3 cents, but it’s like realistically, that does not matter. It does not impact my planning. Or for example, the tax brackets go up every fall when the new brackets are announced, everyone’s like the brackets went up and it’s like while yes, that has a material impact on clients, it does not have an impact. I have an exchange with it is what it is. I cannot influence it. So it does not matter to clients. It is what it is. The tax rate is there, the bracket is there, Congress said it, I can’t change it.


That is not an important valuable fact in people’s lives. And like you’re saying on the very flip side, you’re having the issue with Puerto Rico. I know there’s one, there are a few people I love following you around, reminding you about Puerto Rico, but on the non-investment side of things like the Augusta loophole or hiring your children or whatever, these are sexy tax strategies and I guess on one hand it is more proactive and it is more planning than just being like, here’s the new mileage rate, but it’s impractical, not impractical. These things exist. The Augusta loophole exists, but it’s kind of like if you told me you saw a tiger in your backyard, yeah, it’s within reason. It could happen. I just don’t believe you the same way where you’re like, I’m totally eligible for the Augusta loop. It’s like I’ve only ever seen one client truly eligible for the Augusta loop. 

Steven (06:47):

That’s interesting. Well, I’ve filed quite a few returns with the Augusta rule applied and honestly I feel good about it, but it wasn’t the thing we’d led with. It wasn’t the first tax planning thing we went down. I like your approach on this too. I feel like we take very similar stance on this. Let’s start with the basic stuff and build. If you can show me that you’ve taken care of everything else short, then we can talk about the Augusta rule, then we can talk about getting your kids on payroll. I’m a huge fan of those things, but in order, don’t come to me with the latest TikTok thing and skip right to the end. I just recorded a whole course on Backdoor Roth contributions, which can be a valuable strategy. But even in the course I talk about this is not your first option. This shouldn’t be the first thing you skip to. Let’s see if you’re even just funding a 401k, why skip to the complicated stuff when there are other things we can be doing?

Michael (07:40):

And I think that is what a lot of current popular tax planning advice kind of misses that. It is these kind of, and I get why people say it, it’s sexy, it brings leads in, but the reality is that it’s only a handful of people really can implement these things. And like you’re saying, and I’m sure I’ve said in the past also, there’s a lot of savings in the groundwork. Just like with great financial planning, if you go and talk to any great financial advisor that’s listening to this podcast, they would not say financial planning is just stock picking. You know what I mean? They would say there’s groundwork, there’s making sure there’s insurance, there’s making sure everything is covered and the client is actually protected. And tax planning has that aspect too. There’s a lot of boring things that aren’t fun to talk on podcasts but make a huge difference in the client’s relationship with their taxes.

Steven (08:33):

Some of those seemingly boring things that if you’re in this space all the time, it can feel, I know I feel this way sometimes. It’s like, geez, I talk about these things over and over and over again. Surely people are doing them now and they’re not. And unless I actually check the return and make sure that every year they’re doing them, they’ll get forgotten about. And I think some of the reason that people don’t lean it as much as they maybe could is because a lot of these things are more pain prevention than necessarily sexy things to go out and proactively do. But that pain prevention can be a big deal because taxes get real painful real fast if you’re screwing around on the sexy stuff and forgetting about the things that we just need to do year over year.

Michael (09:16):

There’s nothing cool or fun about reminding your clients to update their withholdings, right? It’s not super duper awesome, but in their life that can have a meaningful difference with their relationship with taxes. I’ve had clients come to me where for the last God knows how long, they’ve paid five to $10,000 a year. And while on one hand in more complex scenarios, that does take some tax projection to figure out the majority of simpler scenarios where it’s a W2 and a handful of slightly more advanced factors. You could literally take the amount owed divided by either 24 or 26 and tell your client, Hey, have you thought about updating your withholdings based on what I’m seeing? I think you should increase them by 50 bucks a paycheck. But that’s not a guarantee. Things can change tax laws or situation, blah, blah, blah. That is not worth going on a podcast and talking about to a bunch of other accountants. But to your client is meaningful going from owing five 10 grand every year to owing a thousand dollars, $2,000 or getting a refund. While it isn’t free money in the way that Puerto Rico or paying your kids or Augusta can do, it means something to them. And the way the client thinks about money, it almost is free money. Now they don’t have a $5,000 bill. Yeah.

Steven (10:38):

The other thing Michael, I’ve noticed is that a lot of taxpayers don’t really believe that tax planning’s a real thing. And what I mean by that is that a lot of people just feel very beholden to the tax code and the tax process. What’s going to happen is going to happen. And so why spend time on it? I can’t really affect the outcome. And so when I have clients, we start with something simple like let’s adjust your withholdings together. And then they see that that can have an impact. It suddenly opens their eyes to, oh wait, Steven might actually know what he’s talking about. Maybe we should listen to him on these other, maybe we should follow through on these other things. Maybe there are more ways we can have an impact on our tax situation. But if all you’ve ever done is file a tax return every year and just said, well, I guess that’s what I owe. The idea that proactive tax planning can have an impact is a new concept.

Michael (11:26):

Definitely. I think to a certain extent there are certain situations where there isn’t much you can do other than update your withholdings and fund your 401k for those people. I get it. But once you start getting more and more complex, there does become a lot of tax pain and I guess I feel I’m going to keep harping on the same points. While a lot of it isn’t amazing, it improves their relationship with taxes.

Steven (11:50):

Yeah, it absolutely improves their relationship. And there’s a reason you and I are here on a podcast for advisors talking about this and not on a podcast for tax professionals, at least from my perspective, it’s two main things. One, there’s fewer and fewer tax professionals for us to talk to anyways. And two, because of that, most tax professionals, the way they’ve historically set up their practices, they’re trying to see how many returns they can grind out in a year. They are not thinking proactively. They’re not thinking about the future. They’re not helping your clients make these adjustments. They’re just saying, yep, I did your return and here’s how much you owe and let’s move on. And so as a financial advisor, you are in a really great position to understand things that are going on in your client’s life that need to be reflect on the tax return and to help them have a better relationship with their tax situation. And they’re going to be endlessly grateful to you for it. And that’s going to increase your retention. It’s going to increase your ability to get new clients, it’s going to increase the fees that you can charge because you are delivering more value.

Michael (12:48):

And at the very least, even if it doesn’t do all those things, at least you’ll be able to sleep with yourself at night knowing you made a difference in your client’s life. I mean, to an extent, as much as I want to also sit here and say caring about your clients will totally transform your practice, it may not, but at least still care about your clients and that’s pretty good. I think that’s somewhat admirable. And like you’re saying, with fewer and fewer accountants trying to churn through returns, that is very true and it does leave the kind of tax planning ball open to whoever wants it. And to a certain extent, advanced tax planning is kind of stuck with accountants. Unless you buy tax software and play with the numbers yourself, there is a certain level where it’s like, alright, you do have to know.


But also when accountants are churning through returns, and not all accountants are, but when accountants are churning through returns, they’re not giving any tax advice that leaves simple tax advice that like I was saying earlier, literally opening the return, looking at how much they owe, doing basic math and saying, Hey, go increase your withholding by this much. It leaves it for you. And it is a very simple thing, and I know you’re always telling financial advisors to review returns, but it’s like what do you do after you review the return? Well, it’s a very easy and actionable kind of thing. You look at the return, you look at the last thing, you’re like, everything looks right, but have you thought about changing withholdings? And now instead of you finishing that review and being like, ah, looks good, now you have an actionable thing, their accountant didn’t even mention that to them, and you’re the guy slash gout mentioning that now, right? Yeah. And a lot of that tax relationship management type planning, very approachable. You don’t need some high-end software. You don’t have to buy another tax planning tool specifically for this, right?

Steven (14:33):

Yeah. And even though, geez, the last estimate I saw was that the tax codes some 80,000 pages long. This is the great thing about having a narrow client focus. You don’t need to know 80,000 pages of tax code. You probably need to know a dozen or two dozen strategies that are relevant to your clients so that as you’re going through and applying what we like to call the dishwasher rule, which is getting credit for the things you do, your significant other is not going to give you credit for having done the dishes. If they don’t know you did them, get to the end of the tax return, let ’em know, Hey, we went through a 37-point checklist just making up a number or that’s the checklist that we give out. Here’s all these things we did. And to your point, Michael, some years it might be as simple as let’s adjust your withholdings together. Other years we might have more fun things we can do, but it’s not going to be every year. This is about building the relationship over time and good news is probably not quite the right way to put it, but what’s going to keep us all in business is taxes come back around every single year. So even if there wasn’t some exciting this year, we’ve got next year and the 50 years after that.

Michael (15:31):

And even if there’s never anything exciting, that’s fine. I feel like that is par for the course. Once you start listening to TikTok and podcasts and whatever, it makes it seem like everyone should take advantage of the costal loophole or pay their children or report. I keep harping on the same three, we’re going to have to stick with it, but everyone was taking advantage of these niche things. But when you actually break down the math on them, realistically, it’s not that many clients, just like not that many clients are in a position for a Roth conversion today. Not that many clients are in a position for any advanced tax-paying strategies. I guess the reality when most people have a job for an employer or a smaller business and they don’t have that much free cash flow, you’re already struggling to get them to max their four oh k. It’s okay if you can’t convince ’em to do some wacky tax planning because they don’t even have the 20 grand for 401k, let alone the 20 grand to fully take advantage of paying their children. Not that you need that much, but yeah.

Steven (16:29):

And this really highlights again, the value of being really laser-focused on who you serve. If we took the entire population of taxpayers, it’s a very small percentage that a lot of these things apply to, but as an advisor, if you narrowly focus just on business owners or just on retirees or just on people retiring from a specific company, now we can start dialing it in where maybe a large percentage of your client base is using that strategy. And Michael, just for context for our listeners, and you tell me if I’ve got this right, but I think part of where you’re harping on these particular things comes in is you work with a lot of small business owners, and so you probably hear all of the fun TikTok things for business owners constantly. You have to just probably find ways to try to deep breath and not call them too many names before you just say, listen, you still haven’t done the basic things I told you. Why are you skipping ahead?

Michael (17:21):

Yes, there is a lot of that. Usually, thankfully my clients aren’t too bad with sending me tiktoks of wacky new things to do, and they do understand I’m more of a, let’s make sure the business is operating well before you worry about wacky tax things. But every now and then, yeah, one time I had to tell a client, we’re going to go on a tangent. People years and years ago, I think this is before even TikTok, I had a client who was clearly a fraud. He was clearly describing fraud using multiple shell companies or whatever and this whole thing. And this guy was behind on taxes, behind on filings, all these things. And he explained this whole thing and I just paused and took a deep breath and I was like, politely, you are not organized enough to commit this sort of fraud. And he laughed and he is like, yeah, you’re right. And I think to an extent, a lot of clients that don’t even have their bookkeeping together are not organized enough. When push comes to shove, they won’t want to do that. And I think you had maybe mentioned earlier, that a lot of the very advanced tax planning things do involve some sort of bookkeeping aspect or keeping proof and that sort of thing. And no accountant’s going to want to risk it if you cannot keep documentation highlights. 

Steven (18:37):

Another opportunity for advisors who are trying to do that advanced tax planning, if you want this to go, well, this isn’t about coming to the client or their accountant with the idea and saying, Hey, we’re going to go do the Augusta rule, Mr. Or Mrs. Accountant, please go do that for our client. That is going to not make you any friends. If instead, you are coming to the client and the tax professional and saying, Hey, here are these things we’ve already gone through. We’ve already got squared away and we’re in really good shape on all of these areas, and by the way, I think the Augusta rule will be a good fit and here are comparable rates that we’ve found, and here’s how we’re going to make sure we’re keeping track of it and how it’s going to be reported. If you can present all of that to me, great, let’s do the Augusta rule together.


But if you’re just like, Hey Steven, I heard about this once. Go do it tomorrow. Geez, just a couple of months ago, thankfully this wasn’t a client had a business owner find out that I was doing taxes in just my local community, and he shared with me that he was working specifically with a group I think out of Chicago, that the Augusta rule is kind of like their bread and butter. They had helped him deduct $170,000 of rental income as tax-free using the Augusta rule. And the taxpayer I was talking to, the business I was talking to was understandably concerned that that might be aggressive, which I a hundred percent agree with. If I’ve already talked about this on the podcast, I apologize to my listeners, but it’s just so mind-blowing to me the way they went about this because part of the Augusta rule is that you need a comparable rate. So they took this person’s local market, found the single most expensive hotel room in the entire town, took the per square foot rate for that room on a peak night, and then applied it to the person’s entire house for 14 days, didn’t have documentation of business meetings or minutes or what they were doing, none of that. It was more of a let’s hope the IRS doesn’t notice, which turns out the IRI does notice these things and has court cases on them.

Michael (20:36):

I feel like a lot of these advanced tax ban things you see around a lot of it is hoping the IRS doesn’t notice because when you actually sit down and do the math on these things to make it pragmatically happen in real life, it is even harder to do in real life. You know what I mean? I guess let me explain Augusta for the audience who may have heard it before, but whatever. I’m going to take a big step back and we’re going to go through taxes. I guess you’re listening to a tax podcast, so can’t complain. So the Augusta loophole is technically not a business loophole. It’s technically a personal loophole. If you rent your residence for less than 15 days, you do not have to report or recognize any of the revenue or expense from that rental. And the point of it was to make renting for small periods of time less burdensome and to let the people who have houses near Augusta and the masters tour rent and not pay taxes.


And then at some point, someone realized the business can rent the personal residence from the individual. The business gets a deduction and the individual doesn’t report it and bingo, bingo, there is free money. But Steven was kind of talking about right there, there’s more to it. You need to have proof in case the IRS kind of comes along and everyone kind of defines proof differently. For me, if we’re doing it, I’ll want the fair market value of venues. You could rent for a comparable cause and that’s what we’re going to use. But then you do kind of have these operators who I’ll hand that to ’em. That’s creative. That is a creative way to find fair market value. I don’t think it’s standup in an audit. 

Steven (22:14):

I don’t think so either. But they did have support. They didn’t just make up the number. There was math, and math is always right.

Michael (22:19):

The problem is it’s not ordinarily necessary. It is unreasonable and on its face, it is not deductible. But you do see a lot of that. And that is kind of why I am somewhat against the Augusta loophole. Augusta loophole is super dope when you can deduct $170,000 and not have anyone at your house and not actually do any of the things. But in the reality of it, you have to have a residence that you want to invite employees over or potential clients or clients. You have to host events. You have to want these people in your house. I feel like no one talks about this. You have to want these people in your house, and I know we love our employees and we love our clients, but in your house, that’s also assuming they live local and they have to come over to your house and you have to have less than 15 days of events at the end of it, the fair market value for a conference hall or whatever, let’s call it a thousand dollars a day plus let’s say you bought $500 of hot dogs having an event and you have to have food.


So I mean you wind up with maybe on the high end, 15,000 to $20,000 worth deductions, which saves you, I dunno, let’s call it 10 grand. That’s a lot. Let’s call 10.  Yeah, we’re going to say they’re in New York City where there are a lot of taxes. So at the end of it, you save a bunch, that’s great, but if you weren’t already doing offsites and retreats, you’ve now lost the productivity of those days. Now the employees weren’t doing anything all day. They were at the event, which I’m all for offsites and retreats and stuff and employees meeting in person, that sort of thing. But if you weren’t doing it well, there’s, I guess an opportunity cost to that, right? And if you were doing it, you are now inviting all of your employees into a cool retreat in wherever cool city you were going to pick to your house in wherever the hell you live.


You know what I mean? So even if you can do everything and you can make it happen, and I’m not saying this is a bad loophole. If the fact pattern makes sense and it makes sense, then you should do it. But I’m saying when you really look at the fact pattern, and a lot of the time it doesn’t make sense. You don’t want them over at your house, you don’t want to lose productivity. And you could have, instead of having that tax savings raised your hourly rate by $10 an hour and effectively created the same amount of money in your business, I think that’s really Mike ripe with a lot of these advanced tax plannings that when they make sense, hell yeah, it’s free money. But a lot of people want to shoehorn situations that are not really meant for it. Intuit, which is, it is very much, I hope the IRS doesn’t catch it. And I’ve seen the returns too where you’re like, wow, thank God they’re not my client.

Steven (25:08):

Michael, I really like how you laid that out because, for me, it comes back to let’s make good life decisions, let’s make good business decisions, and then figure out the most tax-efficient way to go about it. Like I said, I absolutely file returns with the Augusta rule on it, but it is the exception. It’s not half my clients, it’s not a quarter of my clients. It’s only for clients who are already doing all the other things they should be doing. And this fits with their business model. And you’re actually, we wouldn’t talk about it ahead of time, but you’re in the right ballpark of 15 to 25,000 is what we’re talking about here. We’re not talking about 170 because I don’t want to go to court and it’s for people who are already doing these types of things so the first year we’ve got to put a little extra work into setting up the documentation and then it’s kind of on autopilot. But yeah, it’s the exception, not the norm. Let’s take care of the stuff that makes sense before we get exotic.

Michael (25:57):

Exactly. We got to take care of. And we also got to recognize, not just take care, recognize that this sort of simpler tax planning is good and it’s good for the vast majority of clients, especially if you aren’t specialized, like you said in business and high net wealth, high net worth, high net worth clients. If you just have regular people, it’s fine If you’re doing simple tax planning, it isn’t as exotic as what we’re talking about podcasts and stuff like that. But to them and the life they’re living and comparing it to their friends and their friends crappy accountants and their friends, non-existent financial advisors, pretty dope.

Steven (26:33):

There’s something about taxes. The dollar amounts don’t have to be big for people to get really excited. I hear from clients all the time who are endlessly grateful just because I helped adjust their withholdings by a few thousand bucks just because I helped them avoid the underpayment penalties they always used to pay just because we’ve finished max funding their HSA and they can see that they saved 700 extra bucks on taxes. These are small and these are four high-earning clients. The dollar amount’s not relevant so much as the fact that it’s taxes and I help them pay less. Michael, you and I could go on for hours or days on this. We got to be at least a little bit respectful of people’s time. We’re going to completely switch gears here and we always wrap up with action items, but so this is coming out as we really kick off the filing season. So why don’t you and I each recommend an action item to our listeners that advisors or things they can recommend to their clients that will make tax preparers’ lives easier during tax filing season? And before I let you answer, this is how you make your client’s life a little bit easier. This is how you improve their relationship to taxes by taking some of the pain out. So Michael, what’s something you would love? Everyone would do differently during tax filing season.

Michael (27:44):

I was going to interrupt you, but I guess I’m not interrupting because it’s my turn, but to interrupt you, I would say if you are doing any sort of complicated transaction with your client to make sure they have enough documentation and an explanation, right? I dunno what you guys give the people who are members of your group, your clients, or whatever, but I can suss out if there’s a Roth conversion and my client hasn’t mentioned it, right? I do enough Roth conversions that I’m like, oh, they’re young and made a $6,000 distribution from an IRA that’s suspicious. You know what I mean? And I’ll ask the, I guess uncomfortable reality is a lot of accountants don’t notice that sort of thing and they don’t ask. And what happens is that a potentially non-taxable Roth conversion, there’s a lot that goes into that. Please listen to whatever episode describes how the Roth conversions work.


Alright? Potentially non-taxable one becomes taxable and just kind of jacked up everything and all the great things you said to your client that explained why they should do the Roth conversion, why it should either be a $6,000 conversion or maybe even a bigger $50,000 conversion, right? Well, if you had intended for that to be a tax-free conversion and you had sold it to your client as a tax-free conversion and the accountant screws it up on the tax return, that is a tax conversion. It doesn’t matter how we feel about it, it is what is reported to the IRS and what you’re paying taxes on. So your brokerage, whoever you’re working for will give them the 1099B. You don’t have to provide that. It’s probably good enough. It’s not like your office is creating the equity comp issues of RSUs that are truly problems, but if there are any advanced transactions, anything involving K1s, right?


If you have clients investing in taxable accounts, PTPs do REITs, remind your clients that you have to wait for the K1, right? Sometimes they forget they’re waiting for the K1 and then they file and they have to mend over the summer and then their accountant charges for that. So I guess that’s really the main thing. Make it obvious. Anything that’s not obvious, right? And a tangent that has nothing to do with actionable things. Your brokerage house creates the 1099s and stuff like that, the K1 and all those things. Every now and then a financial advisor reaches out to me and is like, I make sure my clients get all the 1099s. And it’s like you don’t, corporate does. Corporate is legally required to send them. That is the bare minimum I’m asking for here.

Steven (30:08):

So takeaways here are don’t take credit for work you don’t do. And then I was actually thinking in a similar vein, don’t assume that tax documents like 1099s or K1s actually provide all the information, 1099s are at times borderline worthless. For the few tax professionals like Michael and I out there who do a lot of this, we can realize, hey, something’s not right here, but we still have to go ask the questions. So providing that information upfront is a great way to make your clients tax filing season so much easier.

Michael (30:38):

Adding on to that, I was saying that 1099s are no biggie, blah, blah, blah. If you do know that your client has equity comp, whether that’s restricted stock RSUs options or whatever, there are frequently, I don’t want to call ’em complicating factors, but off-form factors that may not be noticed by the accountant, but since you are the investment professional that does notice these things and does know these things, it would be helpful to explain that yes, the accountant should be aware. Yes, the client should know how their comp works, but they probably don’t. They don’t. Equity comp is very confusing once you get into it.

Steven (31:15):

Well, Michael, I appreciate you coming on and having some fun with me. You mentioned backdoor Roth contributions in there. Actually, for anybody who wants to learn more about that, go out to I actually recently recorded a masterclass on that, walk you through the whole thing. If you haven’t already, block your calendar for September 25th through 27th. We’re doing our second annual RTS Tax Planning Summit in sunny Phoenix, which as I record this, it’s five degrees outside, so I’m very much looking forward to that. So looking forward to more opportunities to have fun on tax planning. Again, Michael, thanks so much for being here. Good luck with the filing season.

Michael (31:49):

Oh, thank you. Thank you for having me as well.

Steven (31:52):

Of course. And to everyone listening, until next time, good luck out there. And remember to tip your server, not the IRS!


The information on this site is for education only and should not be considered tax advice. Retirement Tax Services is not affiliated with Shilanski & Associates, Jarvis Financial Services or any other financial services firms.

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