Last year, a client told me they had never had a tax-planning conversation with their financial advisor. Whenever taxes came up, the response was, “I can’t advise on taxes.”
We reviewed year-end opportunities involving tax loss harvesting, charitable giving, and portfolio rebalancing. Those decisions helped the client save more than $10,000 in taxes. They also received their first refund in many years, although a refund itself is not a measure of tax savings.
That experience illustrates why investment decisions deserve a tax conversation while there is still time to act.
Tax-loss harvesting involves selling investments at a loss in a taxable account to help offset realized capital gains. Even when your portfolio is up overall, individual holdings may offer opportunities. For most individual investors, qualifying sales generally must occur by December 31st to count toward that year’s taxes.
The details matter. The IRS wash-sale rule can disallow a loss if substantially identical securities are purchased within 30 days before or after the sale. Purchases in an IRA or by a spouse can also trigger the rule.
This is why a review needs to look across your accounts. A decision in one can affect another. Rebalancing, charitable giving, retirement income, and money needed for college or a home purchase should all inform the plan. Harvesting may defer taxes rather than eliminate them; costs and investment risks also deserve consideration.
Your financial advisor and CPA each bring a valuable perspective. Coordinating those perspectives helps connect what you own, what you owe, and what you want your money to accomplish.
That coordination should be proactive. If you hear from your advisor only once a year, ask what happens between meetings: Who reviews changes in your circumstances? Who initiates the tax conversation? Who follows through?
I approach each client’s plan with the same care I would want for my parents or grandparents. That means staying involved, explaining tradeoffs, and being honest even when the guidance is difficult to hear. Sometimes the most valuable conversation is the one a client did not know to ask for.
Before year-end, ask for a coordinated review of your investments and tax situation. If you are unsure how those pieces fit together for your family or a client you serve, I welcome that conversation.
Client example reflects individual circumstances; results vary. Educational information only, not individualized investment, tax, or legal advice.
All advisory services are offered through Savvy Advisors, Inc. (“Savvy Advisors”), an investment advisor registered with the Securities and Exchange Commission (“SEC”). Savvy Wealth Inc. (“Savvy Wealth”) is a technology company and the parent company of Savvy Advisors. Savvy Wealth and Savvy Advisors are often collectively referred to as “Savvy”.
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