Broker Check

Why Do We Coordinate With Your Accountant?

May 29, 2024

We are lucky to be associated with so many accountants. I realize that those are not words often heard, but in this case it is very true. They are critical to our financial and tax planning, and if we don’t get that right, it can adversely impact a client. Whether capital gains management, or income from investments, your expenses and taxes can be greatly affected for good or ill.

One example is your Social Security income. Although at most, 85% of Social Security income is included in taxable income, the tax calculation can create a situation in which Social Security recipients with modest income may see a de facto marginal tax rate of near 50% if we cannot coordinate the financial and tax planning.

A related issue is the Medicare parts B (medical insurance) and D (prescription drug coverage) monthly premium amount. Did you realize that there is an additional income-related surcharge (our good friend IRMAA), which applies to individuals with income exceeding $100,000 ($200,000 for married couples)? At a certain income level, you can see your premium increased by almost $10,000 per person. We work with our accountants to try to manage this to help our clients.

Another fun topic is the college expense/financial aid (FAFSA) calculation. Remember, there are income levels beyond which the government will determine that you don’t qualify for aid, sometimes even after the college has said that you do.

We have many times run into situations where a client will sell their business or property, or just have the normal capital gains from investments, and these gains can greatly impact their taxes. We discuss with the client and the accountant to see if there are losses that can be taken to offset gains; and/or we try to find ways to defer the taxes where possible.

When it comes to charitable giving, it is generally true that matching charitable giving with higher income years can maximize the tax benefit. Again, we work with the accountant to determine what is the best level for those who are charitably inclined, and which vehicle is most appropriate. We also work to use IRA funds after a client is 70½ so that direct qualified charitable contributions can be made without those direct contributions being taxed. It is also many times advisable to consider gifting a highly appreciated asset to the charity to avoid paying capital gains taxes on the asset.

Many times, a client will have deferred compensation and/or stock option programs where they work. None of this should be done in a vacuum. Taxes, cash flow, stock performance, employment status, should all be considered when determining whether to exercise options and sell stock. Incentive Stock Options (ISOs) require the most planning and all parties should be involved. Given the alternative minimum tax concerns, planning for ISOs is a multi-year process and every transaction should be carefully considered.


We always like to work with our accountants to make sure that we properly manage your tax situation, and coordinate that with your overall financial plan. Let us know how we can help.