The Tax Cuts and Jobs Act of 2017 is the largest tax overhaul since the Tax Reform Act of 1986. Everyone in the financial services industry is talking about how this sweeping legislation impacts clients. Strategic advisors will be able to capitalize on this enormous opportunity. Remember:
The Tax Cuts and Jobs Act provides both opportunities and risks for advisors.
Because the Tax Cuts and Jobs Act was so widely publicized, many Americans are asking how the legislation will impact them. Demonstrate for your clients and their CPAs exactly where there may be missed opportunities to make changes to withdrawal strategies, small or large, that could impact the total amount of taxes paid, and thus the total wealth of the client. Tax Clarity® can help you clearly and accurately calculate some of the changes introduced by the new legislation including:
Your clients may push you to provide tax advice. There are tax-related competencies that are at the heart of what advisers do, but that does not mean providing advice that will serve as the basis for clients’ specific tax-related decisions, and advisors need to be clear. Advisors, in general, are not authorized to represent clients in front of the Internal Revenue Service (IRS), which means by definition, the advice they give must not be tax advice. Therefore, it's important know when to refer the client to a CPA, enrolled agent or an attorney. The following tips can help you navigate a potentially risky situation:
The Tax Cuts and Jobs Act impacts clients in different ways. Those who will be impacted the most include: clients with children, small business owners, semi-retired individuals and self-employed clients. In addition, fewer than 15 percent of people are expected to itemize now, compared to the roughly 30 percent who itemized deductions before the legislation passed. The legislation was expansive; here are some of the biggest changes:
The 2017 Tax Cuts and Jobs Act has created new opportunities for financial advisors and certified public accountants. Advisors should not ignore the impact that anticipated taxes or potential changes in various tax rates will have on client investing and retirement income decisions moving forward. In fact, routine financial planning work generally must consider a broad set of tax issues and how these relate to the advice that is being given.
Looking for additional help on how to provide tax-efficient retirement strategies for your clients? Try Tax Clarity for free.
The topic of taxes is like the elephant in the room – many financial advisors know taxes have a significant impact on their clients, but due to uncertainty surrounding the scope of their duty to clients and the possibility of compliance issues for addressing taxes, they ignore or gloss over the topic of taxes.
But clients are flooding their financial advisors with questions about how the Tax Cuts and Jobs Act will impact them. Be prepared to confidently address the topic and download our white paper now.