Financial Planning and the Tax Return

Personal Financial Planning Basics and the Tax Return [date] [venue] [contact information]

Introduction About the PFP Section & PFS Credential • The AICPA PFP Section provides information, resources, advocacy and guidance for CPAs who specialize in providing estate, tax, retirement, risk management and investment planning advice to individuals and their closely held entities • The CPA/Personal Financial Specialist (PFS) credential distinguishes CPAs as subject-matter experts who have demonstrated their financial planning knowledge through experience, education and testing

Personal Financial Planning Section

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Why use tax returns to develop personal financial planning Overall picture of clients’ financial situation Uncover opportunities for planning that client has overlooked Details of cash flow/income situation Use in conjunction with client balance sheet

Personal Financial Planning Section

Dependents

Children

Elderly parents

Personal Financial Planning Section

Income – Understand the Sources

Deferral opportunities Retirement Plans/IRA’s Roth Conversions Personal Financial Planning Section

Interest – Schedule B

Taxable vs. Tax-Exempt Bank Accounts – FDIC limits Cash levels – emergency fund Personal Financial Planning Section

Dividends – Schedule B

Source Alternative Investments? Titling and Custody? Stock Concentration Personal Financial Planning Section

Schedule C

Succession planning Income Shifting Business Structure Home Office Personal Financial Planning Section

Schedule D

Carryovers Trading activity Loss harvesting Investment Strategy Personal Financial Planning Section

Retirement Plans/Distributions Required Minimum Distributions being taken? Net Unrealized Appreciation (NUA) from 401(k) Beneficiary elections Source of Withdrawals Has a Roth Conversion been considered? Withdrawal Rate

Personal Financial Planning Section

Schedule E – Real Estate

Risk management Multiple owners Estate planning Passive activity loss rules Personal Financial Planning Section

Schedule E – Partnerships, S-Corps

Valuation issues IRS attack on Family Entities Investment partnerships Negative Basis Issues Personal Financial Planning Section

Schedule E - Trusts

Trust Management Investment Strategy Trustee Adequacy Trust Purpose Distributions Personal Financial Planning Section

Simple, SEP, IRA

Investment choice Deferral Opportunities Qualified plan/defined benefit plan Personal Financial Planning Section

Schedule A - Medical Expenses

Long Term Care Insurance Health Insurance Medicare Rules Impact of Obama Health Care Act Health Savings Accounts Personal Financial Planning Section

Schedule A - State Taxes

Residency rules Multiple state residency Potential tax liability in other states Timing of payments and AMT

Personal Financial Planning Section

Schedule A - Interest Expense

Limitations Carryover of Inv. Interest Exp Margin Interest

Personal Financial Planning Section

Schedule A - Charitable

Appreciated securities Timing IRA distribution – direct to charity Carryovers Documentation Rules

Personal Financial Planning Section

Schedule A - Miscellaneous

Investment fees Limitation Planning opportunities

Personal Financial Planning Section

Partnership Tax Returns

Partnership agreement Valuation Employee benefit plans Profit Allocation Multi-state operations Personal Financial Planning Section

Corporate Tax Returns

Compensation of officers Shareholder agreement Multi-state operations S-Corp vs. C Corp Personal Financial Planning Section

Gift Tax Returns

Number of donees Split gifts 529 plans – special rules Valuation discounts Basis and date Personal Financial Planning Section

Alternative Minimum Tax Impact on overall planning Current/proposed changes Stock options • Planning opportunities for ISO exercise

AMT Credit Carryover – potential loss of credit

Personal Financial Planning Section

2011 Changes Impact on your clients’ situations Potential future impact of tax rate increases Potential expiration of Bush tax cuts - status Estate tax status

Personal Financial Planning Section

Summary We can learn a lot about someone through their tax return. Many tax and investment planning opportunities can be uncovered with a thorough review of your tax return.

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Q&A [insert contact information here]

Special thanks to Lyle Benson, CPA/PFS, CFP® and Glenn Freed, CPA/PFS for contributing content.