Tax insights your CPA never told you

Tax insights your CPA never told you
Here are three tax insights you can pass on to your clients when you've exhausted all the customary ones.
APR 17, 2023

Every working American is probably aware that April 15 is the deadline for filing federal and state income tax returns. But not in 2023. This year, it’s April 18 — except for New Yorkers (mainly upstaters) walloped by winter storms for whom it’s May 15; tornado-ravaged residents of Mississippi, who must file by July 31; and residents in parts of Alabama, California and Georgia affected by other recent natural disasters, who have until Oct. 16.

This year’s April 18 deadline, by the way, is the result of April 15 falling on a Saturday and Sunday, April 16, being Emancipation Day, the date in 1862 when slaves in the District of Columbia were set free. Since that holiday is celebrated Monday, April 17, and federal government offices will be closed, April 18 is this year’s April 15.

Complicated? Well, why should tax-filing day involve any less complexity than our nation’s tax code? As knowledgeable guides through investment-related aspects of the tax maze, financial advisors are important helpers to millions of Americans.

Most advisors do a great job reminding clients to save through tax-advantaged workplace retirement plans, investigate health savings accounts, consider Roth IRA conversions and keep accurate records for capital gain and loss purposes — among the dozens or more of tax-related suggestions they make all year long.

But as worthwhile and effective as their efforts are, there is probably a good chance that by the time April 15 (or April 18) rolls around, advisors are tired of making tax-related suggestions, tired of client complaints about taxes, and disgusted that efforts to make the tax code and tax filing simpler and easier never go anywhere.

Don’t despair. For tax-weary advisors, here are three tax insights you can pass on to clients when you’ve exhausted all the customary ones:

Tax insight No. 1: Nobody pays their fair share of taxes. That’s the consensus of rich people who feel poor people don’t pay what they should, poor people who believe rich people get away with murder, and the beleaguered middle class, which is convinced it pays for everything.

Tax insight No. 2: Don’t wish for lower taxes in retirement. Lower taxes in retirement are directly correlated to lower income. Cruises? A nice dinner? Gifts to grandkids? Not if you’re living on less.

Tax insight No. 3: Lower-tax states aren’t necessarily nirvana. Having greater after-tax income is terrific, but it’s not the only thing in life. If living in a higher-tax state means having access to things that are important to you (i.e., grandchildren, good doctors, a great library), paying more in taxes may be a worthwhile trade-off.

By the way, April 18 is also Tax Freedom Day, which is calculated every year by the Tax Foundation. In the 1940s, the business group wanted to find out when the average American worker would get to keep any of their own money if they sent their entire paycheck to the government starting Jan. 1. If it’s any consolation, Tax Freedom Day has fallen right around April 15 since 1970, consistently reflecting an average tax burden of around 30%.

Why custom direct indexing will be the next big thing on Wall Street

Latest News

Citarell to spearhead Northeast sales growth for Easterly
Citarell to spearhead Northeast sales growth for Easterly

John Hancock veteran has more than 30 years of industry experience.

Hightower Advisors chief Oros to step down, Goldman Sachs 'lifer' is replacement
Hightower Advisors chief Oros to step down, Goldman Sachs 'lifer' is replacement

New leader takes over a firm that has seen remarkable transformation.

Why aren't investors celebrating stellar US earnings season?
Why aren't investors celebrating stellar US earnings season?

Tariffs, rates are overshadowing what should be a positive period.

Gold declines for second day following comments from Fed’s Powell
Gold declines for second day following comments from Fed’s Powell

Record rally for bullion is on hold for now as investors weigh outlook.

BlackRock hopes to end dispute with FDIC over bank stakes
BlackRock hopes to end dispute with FDIC over bank stakes

The deadline for an agreement has already been extended twice.

SPONSORED Taylor Matthews on what's behind Farther's rapid growth

From 'no clients' to reshaping wealth management, Farther blends tech and trust to deliver family-office experience at scale.

SPONSORED Why wealth advisors should care about the future of federal tax policy

Blue Vault features expert strategies to harness for maximum client advantage.