Your CPA prepares the tax return and reports what already happened. Most of the tax on that return was decided earlier, by choices about which account to draw from, when to sell, whether to convert to a Roth and how to give. As a fiduciary financial advisor, Holland Capital works on those choices with your CPA, so the plan and the return are built from the same numbers.
Two Jobs, One Set of Numbers
Your CPA knows the tax law and your return. The CPA prepares the return and can help with estimated payments and questions from the IRS. For a business owner, the CPA may also handle accounting for the company.
Our job is the plan. We look at what you own, what you spend and what you want the money to do. Then we help you decide where each year’s income comes from and when to realize income or gains.
The two jobs come together before a decision creates the tax.
An investment account sells a large position in December. The CPA learns about the gain in March. A required distribution comes out of the account that makes the least sense for taxes. A Roth conversion gets discussed in February, after the year it would have helped has already closed.
Each decision can make sense on its own. The problem appears when nobody sees what the decisions add up to before the year ends.
What We Work On Together During the Year
Most of the coordination happens before December 31, while the year’s decisions can still be changed.
Where this year’s spending comes from. Money from an IRA or 401(k) is generally taxed as ordinary income. Money from a Roth is generally not. Selling in a taxable account is taxed on the gain, not the full amount. We help you choose the mix using the tax picture your CPA sees for the year. There is more on this in our guide to which retirement account to withdraw from first.
Roth conversions and gains. Some years leave room for additional taxable income before you reach a higher bracket. We estimate how much, and your CPA checks that estimate against the rest of your tax picture before anything is converted or sold.
Required distributions. Once they begin, a set amount has to come out each year. We plan which accounts supply it and whether part of it goes to charity directly from the IRA. Our page on required minimum distributions covers the rules.
Estimated taxes and withholding. A large gain or conversion can leave you short on what you have paid in for the year. Your CPA needs to hear about it in time to adjust. Withholding from an IRA distribution is one way to cover the gap, because the IRS generally treats it as paid evenly through the year.
Medicare premiums. Medicare premiums are based on your income from two years earlier. A conversion or a large withdrawal this year can raise what you pay later. We show you that cost before you decide.
A large sale. If you are considering the sale of a business, property or concentrated stock position, we bring your CPA and attorney into the planning before the transaction is complete.
RETIREMENT ENGINEERING™
The Order Matters
Five retirement decisions and why timing matters.
How the Coordination Works
With your permission, we talk to your CPA directly. Most of it happens by phone, video and shared documents.
In the fall, we send a projection of expected income, gains, distributions and any Roth conversion under consideration. Your CPA checks it against the tax information they have. We can then adjust the plan before the year ends.
In the new year, we make sure your CPA has the investment information we have that they need for the return, including cost basis information and a note on anything unusual.
We do not replace your CPA. Holland Capital is not a CPA firm and does not prepare tax returns. The return stays with your CPA, and legal documents stay with your attorney. We connect their work to the rest of your plan, including your retirement income plan and your estate plan.
M. Chad Holland, CFA, CFP® works directly with clients and with their CPAs.
Frequently Asked Questions
Do I Need a CPA Firm That Also Gives Financial Advice?
Not necessarily. What matters is that the person preparing your return and the person advising on your plan are working from the same numbers before decisions are made. Separate firms can do that well when they talk during the year, not only at tax time.
Will You Talk to My CPA Directly?
Yes, with your written permission. We share projections and the reasons behind a recommendation, and we ask your CPA to check the tax side before you act. We keep you informed about what we discuss.
Do You Prepare Tax Returns?
No. Holland Capital does not prepare tax returns or give legal advice. Your CPA prepares the return. We work on the planning decisions that shape what goes into it.
What If I Prepare My Own Taxes?
We can still do the planning. We will give you the projections we would otherwise share with your CPA. If a decision calls for tax advice beyond our role, we will recommend that you involve a CPA.
How Is This Different from Tax Planning Software?
Tax planning software can model the numbers you put into it. Your financial plan adds decisions such as helping a child buy a house next year or starting a pension in 18 months. We plan around those decisions, and your CPA checks the tax numbers.
The work is looking at the whole picture before the year closes and staying grounded in the plan.
