When your financial life gets more complex, small communication gaps can turn into missed planning opportunities.
Most people assume their Certified Public Accountant (CPA) and financial advisor are naturally in sync, but the reality is a little more complicated, and understanding that gap can make a real difference in what you pay in taxes.
At Team Hewins, we’ve seen how much clients gain when we bring these two perspectives together. When we work as a coordinated team of professionals with a shared understanding of your goals and your numbers, it can help uncover tax strategies and planning opportunities, both now and in the years ahead.
The Assumption That Trips People Up: What Does Your CPA Actually Do?
Did you know that filing your taxes and planning your taxes are two different jobs? Let me explain:
- In many cases, your Certified Public Accountant (CPA) is focused on accuracy and compliance. They’re looking at the year that just ended, making sure everything is reported correctly, and keeping you out of trouble with the IRS.
- Your financial advisor, on the other hand, is thinking about what’s coming next. What strategies can you implement now that will pay off over the next five, ten, or twenty years? What opportunities exist in the gap between where you are and where you want to be?
Unless you are specifically paying your CPA for tax planning, they are likely only taking the information you give them, applying the tax code correctly, and filing an accurate return. But proactive, forward-looking tax planning usually isn’t part of the package.
This isn’t a knock on CPAs; it’s just how the relationship is typically structured. They’re filing your return based on what already happened, not necessarily projecting what your tax situation will look like over the next decade or identifying strategies you should start implementing now.
Related: Click here to read “CPA vs. Financial Advisor: Which Do You Need?”
That’s where the disconnect happens, and it can lead to missed (and sometimes costly) opportunities. Without a coordinated view, it’s hard to know what’s being tracked, what’s being missed, and what decisions today could affect you later.
This is especially relevant if your financial life has become more complex over time, whether you are earning more, giving more, nearing retirement, or simply trying to make smarter decisions without having to manage every moving part yourself.
What’s the Cost of Miscommunication?
Let’s get specific about what this disconnect actually looks like in practice.
1. The backdoor Roth that never gets reported.
Backdoor Roth conversions are a common strategy for high earners who can’t contribute directly to a Roth IRA. But here’s the thing: the tax form from your custodian showing that you made an IRA contribution doesn’t arrive until May, which is after most people have already filed their taxes.
If you don’t tell your CPA you did a backdoor Roth, they have no way of knowing, and the conversion doesn’t get reported properly on your return, or it doesn’t get reported at all.
2. Qualified charitable distributions that disappear.
If you’re over 70½ and making charitable donations directly from your IRA, those QCDs can satisfy your required minimum distribution without adding to your taxable income. It’s a great strategy. But if you don’t track those distributions throughout the year and share them with your CPA, the tax benefit evaporates.
We’ve seen new clients who have been doing QCDs for years before joining Team Hewins and never told their CPA because they didn’t realize it mattered. That’s money left on the table.
3. Multi-year strategies are never surfaced.
Some of the most powerful tax strategies are about smoothing out your tax liability over time. Roth conversions in the years leading up to retirement, for example, can dramatically reduce your lifetime tax burden, but that requires someone who’s looking at the next ten years of your financial life, not just the return that’s due in April.
Sometimes it’s a high earner who isn’t maxing out their 401(k), or someone eligible for an HSA who’s never set one up. These aren’t complicated moves, but if no one’s looking ahead, they get missed year after year.
Related: “Meet the “New” Retirement”
The CPA and Advisor Team: What It Looks Like When Everyone’s Talking
One client we work with was in their mid-50s and beginning to think about her future retirement. She was open to having us collaborate directly with her CPA, including three-way meetings where everyone was in the room together.
Because they allowed that level of interaction, we were able to identify Roth conversion strategies that made sense for her specific situation. We could map out what her tax picture would look like over the next decade, factoring in the shift from wage income to portfolio income, and develop a plan to keep her liability as low as possible through that transition.
Our Role: Tax Planning
When we’re working directly with a client’s CPA, here’s what that coordination actually involves:
- We track what you might forget. QCDs, backdoor Roth conversions, charitable contributions, changes in your investment accounts. We’re keeping records throughout the year so that when tax time comes, the CPA has everything they need.
- We share proactively. Rather than waiting for the CPA to ask questions, we send over the relevant information. If you did something during the year that affects your tax return, we help make sure they know about it.
- We review returns. Some clients have us look at their return before it’s filed as an extra set of eyes. Others share it with us after filing. Either way, we’re checking for mistakes and, more importantly, looking for opportunities. What does this return tell us about strategies we should consider for next year or the next several years?
- We think in decades, not quarters. Your CPA is focused on this year’s return. We’re focused on your overall financial trajectory. When you put those two perspectives together, you get a much more complete picture.
This is about helping you feel organized, informed, and confident that the right people are talking to each other on your behalf. And as our client, there’s no additional cost for this coordination. The way our services are structured, everything we do is covered under our regular advisory fee.
How to Get Started
If your financial advisor and CPA aren’t currently in communication, here’s what we’d suggest:
- Ask your CPA what’s included. When you hired them, did you discuss whether they’d be providing proactive tax planning throughout the year, or primarily filing your return? Understanding the scope of that relationship helps you see where the gaps might be.
- Think about what’s not getting shared. Are there things happening in your financial life that your CPA might not know about? Investment changes, retirement account conversions, charitable giving strategies? If that information isn’t flowing, there may be opportunities being missed.
- Consider making an introduction. At Team Hewins, we’re always happy to reach out to your CPA on your behalf. It’s part of what it means to have a team of professionals working together on your financial life.
Sometimes, clients worry that bringing their financial advisor into conversations with their CPA will feel like overstepping or that the CPA will take it the wrong way. In our experience, the opposite is true. Every time we’ve been introduced to a client’s CPA, they’ve been welcoming. They actually like the idea of having another professional at the table. It means someone else is watching out for their client, catching things that might otherwise slip through.
We don’t always agree with the CPA on every recommendation (and vice-versa), and that’s actually the point. There have been times when we’ve proposed a strategy and the CPA has said, “Hold on, you need to consider this tax rule.” That’s exactly the kind of check we want in place.
At the end of the day, everyone’s working toward the same goal: making sure you’re taken care of.
A Coordinated Approach Means a Clearer Path Forward
When your financial advisor and CPA are working from the same playbook, you’re able to build a tax strategy that compounds over time. Remember the client I mentioned earlier? Because we had that direct line to their CPA, we could map out a decade of tax planning, not just react to whatever showed up in April.
If you’re already a Team Hewins client and haven’t connected us with your CPA yet, now’s a great time to make that introduction. Just let us know, and we’ll take it from there.
If you’re not yet working with Team Hewins, we’d love to learn more about your situation. We invite you to schedule a Big Decision Clarity Meeting, and see what a coordinated approach to your taxes could look like.
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Team Hewins, LLC (“Team Hewins”) is an SEC-registered investment adviser; however, such registration does not imply a certain level of skill or training, and no inference to the contrary should be made. We provide this information with the understanding that we are not engaged in rendering legal, accounting, or tax services. We recommend that all investors seek out the services of competent professionals in any of the aforementioned areas. Certain information provided herein is based on third-party sources, which information, although believed to be accurate, has not been independently verified by Team Hewins. Team Hewins assumes no liability for errors and omissions in the information contained herein.