Analyzing 1040s for Financial Planning Opportunities

The demographics, schedules filed, filing status, and level of income accumulated to prepare a client's individual income tax return point to opportunities for taxpayers to better prepare for the future. Tax practitioners can use this data to provide financial planning recommendations and better serve their clients.

The AICPA recently updated its checklist "Analysis of a tax return for financial planning opportunities." Beginning with page 1 of Form 1040, it suggests that dependents on a tax return begs the question, "Has the client considered gift and estate planning opportunities for his or her dependents." This conversation could uncover additional planning needs, including a 529 plan, life insurance, or the importance of updating all beneficiary designations. A taxpayer's occupation listed could suggest a need for professional liability or disability insurance. A client's age or birthdate may indicate the need to verify wage history with the Social Security Administration or RMD planning.

A client's investment income on Schedules B and D might warrant a discussion of FDIC limits, tax-exempt investments, or foreign bank account reporting requirements. Tax practitioners working with individual income tax clients should explore the benefits and value analyzing a taxpayer's 1040 can add to the client relationship.

Listen as our Certified Financial Planner walks tax practitioners through the forms, schedules, and lines of Form 1040 to identify areas that tax professionals can address to assist in planning for the future, and financial planning opportunities offered by the recent tax bill.