Financial Planners doing Tax Prep

It's that time of the "season" when we are sending out emails - "haven't seen you - do you want an extension" - I get a reply from a fairly complicated tax client (S-Corp on extension, W2s, 1099s 500k 350k expenses, home office, etc) he says, " my Financial Planner did my returns "for free" part of his annual fee."
Yes, really - I'm scratching my head - his S-Corp with a K-1 of 150k was ignored by the FP.
When Sh...T hits the fan in 6-months (CP-2000s) come out - we'll see what happens.
Any thoughts?

Let him cry when the notice comes and charge a lot. You're going to have to enter the old return before you amend. Plus consulting.

I had a wealthy client for 35 years who also decided to use her investment advisors tax services which she claimed was free!

Upon review I found that the advisor charged an additional .025 of the entire portfolio for the tax services. That approximated

$7,500 bases on her $3 million portfolio.

I charged her less than $2,000 for the last years returns.

Have your clients do the math!

Is this becoming a regular part of practice management seminars for investment people? I know tax prep was a hot thing among annuity salespeople about 7 or 8 years ago (get people in with a cheap tax returns and then sell annuities to those with money) but I wouldn't have expected that investment advisors would want to deal with the consequences of their advice.

novacpa, most CP2000s for 2017 returns won't come for 17 or 18 months. You should let your client know sooner rather than later (probably now) or is the advisor doing the 1120S too?

I know the S-Corp is on extension until 9/15/18 - has 5/6 1099s NEcomp of $450k or more, and employees/W2s/1009-misc contractors/fixed assets/autos/miles/travel(in-town/out of town)-ownerW2s/home-office/big-mtg/interest. I don't how a Financial Planner can "competently" prepare these returns the 1120s, MD-pass-thru,1040&Md-state. Plus the very delicate issue of charging the S-corp rent and reporting a corresponding amount on Schedule E (with deductions depreciation of home office). 2017 presents some new "wrinkles" so the FP can't simply - copy what I have done before. The old adage comes to mind "penny wise but pound foolish". Some of these FPs are saying (I've heard them) "audits are at an all time low - we can do tax prep any way we want" - Yes really. True I'm seeing CP-2000 15-months delayed. Oh well, 15-months from now I'll be called on "to fix it."

There is another piece to this. By controlling tax prep, some planners eliminate the problem of having pesky tax advisors looking over their shoulder and asking inconvenient questions.....such as why an 80 year old woman suddenly has 85% of her portfolio invested in gold futures?

One of my clients who left for her planner and then came back, returned with a very different portfolio than the one she had when she left.

Keep in mind that anyone and their brother can call themselves a "financial planner" . While there are many concientious planners, there are also many unscrupulous types. They are in it for the short term. Who cares about a CP notice two years from now.

Keep in mind that anyone and their brother can call themselves a "financial planner" .

Kind of like calling yourself a "tax professional".

Keep in mind that anyone and their brother can call themselves a "financial planner" .

Kind of like calling yourself a "tax professional".

Great point.... our industry is full of professionals without a CPA or EA status. Both of whom get my respect. if you are a tax preparer and not an EA what are your qualifications? My assistant became an EA 2 years ago. she studied but it is a very passable exam.

I am a CFP and CPA and can tell you in my view, both are standards that should be sought by the customer. I include EA in that as well.

Maryland is one (1) of four (4) states that "regulated" Tax Preparers - the Statute protects "Maryland Residents" - without regard to the location of the Tax Preparer (could be DC or VA or anywhere). The Statute provides for a $5,000 fine for preparing for compensation tax returns of Maryland Residents without "Registration" and a "License." Their standards are similar to that of an EA. Yes, the former client is a Maryland Resident. I'm not sure if the Tax Preparer is aware of this.

Interesting. I'm not a lawyer, but I would think Maryland's jurisdiction extends only to Maryland tax returns, since the IRS can't even regulate preparers of federal tax returns. At the very least it'll keep the lawyers busy. That's good, I guess.

This has been going on for years!!! Some very impressive practices have been built. Most good financial planers have CPAs on their staff.

Most good financial planers have CPAs on their staff.

If the good ones have CPAs on staff, it really says something that I really don't see that around my parts.

Missing - true - they say "CPAs & Tax Attorneys in our network" (they avoid saying on our staff - or in the office next to me - available for you to meet/consult ). This is the same lie - TV Tax Resolutionist state "in our network" we have...

A recent article from Bob Veres on the merits of CPAs and CFPs working more closely.
https://www.financial-planning.com/opin ... oin-forces

Taxes are a big part of financial planning - if you aren't looking at them you're missing an important component. Part of typical intake is getting a copy of tax returns, for that reason. Preparing the return can be a trivial add-on, after having spent the year doing tax planning, assuring cash flow for quarterly tax payments, tax managing an investment portfolio, etc. And it can be faster & easier to do a return than deal with the back and forth with a preparer. So there are many good reasons why a planner would get into doing returns.

But obviously this has limits. It makes the most sense when it's entirely investment income. Add in some complex issues and you either need the expertise in house, sub it out, or don't do the return.

Well, that didn't take long...

Just met a couple who has been having their financial advisor do their taxes for the past 8 years, and the returns they brought me are very wrong. Schedule E kicked their no-tax-credential-having, TT-wielding, no-PTIN-leaving, CFP's fanny. Good Lord!

My Schedule C client gave a copy of her 2016 tax return to her financial planner to review. I have no problem with that, BUT he told her that since she has Obamacare she cannot deduct any of her health insurance payments as self-employed health insurance and that her 2016 tax return should be amended to show that she owes tax instead of getting a refund.

Fortunately my client had an open mind when she came in this year and I explained to her that she is able to deduct some of her health insurance payments once all of the proper calculations are done. I told her that I have been preparing tax returns for 24 years so she should trust me regarding tax matters and trust her financial planner for financial advise!

Little late-but maybe you can refer client to the following: Sign at the intersection (East side at mall entrance) US Route 6 and Kedzie Av --159th St, Markham Il) (I have pictures on my phone) "TAX COMPANY 110 NEW LOCATIONS NO EXPERIENCE NEEDED
POSITIONS WILL GO FAST 773-273-8955 " I would love to post ad--only a beginner insmart phone operation don