What Your Tax Return Says about Investment Planning

Investment and Financial Planning

Congratulations – you’ve survived yet another tax season! You may (or may not) already be preparing for next year’s deadline. What many business owners and employees often overlook is the valuable insights that tax returns offer in regard to investment and financial planning.

From revealing your annual gains and losses to identifying your retirement distributions, your tax return provides a wealth of information that an independent financial advisor can use to build out your portfolio, assess future planning opportunities, and improve your overall financial management strategy.

Below are a few reasons why tax returns provide key insights into your finances:

Investment Management:

Reviewing your tax return is essential to ensuring that your investment portfolio is informed, it aligns with your strategic goals, and it reflects your current financial situation. For example, by comparing your after-tax rate of return of taxable and municipal bonds, your financial advisor can identity which options provide better long-term savings and a higher return on your investments.

Missed Deductions:

Did you recently start a new business? Maybe you purchased real estate or moved to a new city. These major life changes are important to note in your tax return. They also provide meaningful information to your financial planning advisor in terms of overlooked deductions that were maybe missed, such as moving expenses, insurance premiums, and home office deductions for contractors.

Retirement Planning:

The closer you get to retirement, the more crucial it is to manage your 401(k) and Individual Retirement Account (IRA) or Roth IRA. Your financial advisor will review your retirement withdrawals and make appropriate changes to ensure you’re taking advantage of tax-deductible contributions and choosing the right investment strategy for retirement.

If you’d like to review your tax return with an experienced financial advisor in the state of Minnesota, connect with us today, and we’ll match you with a financial expert whose skills and specialties align with your financial planning goals.