Tax season is upon us. While it is unlikely you will be handling your client’s taxes, there are opportunities to be found within their tax returns.
Those tax returns tell a story. This snapshot of last year’s financial activity is a great resource that advisors can use to help write the next chapter, one addressing the short and long-term goals of clients and prospects.
Careful examination of a person’s tax returns can reveal a wealth of information about their current situation, along with their immediate and long-term needs. Are they retirement ready? Will they be able to leave a legacy behind for their loved ones? Is there a need for life insurance or additional savings vehicles?
Basic and Immediate Needs
No matter their income, your client/prospect will need some form of financial protection. Whether it be to cover debt or unexpected medical expenses, replacing their income after death, or college funding for their children; everyone has a set of basic needs to address. Looking over their tax returns can open the door to conversations about what those needs are and how you can help fulfill them.
Long-Term and Retirement Goals
Clients and prospects nearing retirement age have an extra set of concerns to address. How ready are they to step away from the workforce and enter retirement? Analyzing their returns can help guide this conversation by arming you with information and questions relevant to their unique situation. If the client/prospect is already retired, use this information to discuss any lingering need for long-term care or additional income. This can be especially useful for those who want to ensure their final costs are covered and/or leave an inheritance to their children and grandchildren.
Clients and prospects who own a business can greatly benefit from a comprehensive review of their tax returns. Not only do they have their own needs to address, but also those of their employees and business operations. The hit many business owners took during the pandemic makes the conversation about short and long-term financial planning more important than ever. Your ability to delve into the story told by their tax returns is a great way to start the conversation about how you can come up with a plan that does two things – keep their business afloat during these difficult times and carries their personal finances through to retirement.
For those with small business owners on their radar, the newest announcement about PPP loans is another opportunity for engagement. The Biden Administration recently announced changes to the PPP loan program aimed at helping businesses with fewer than 20 employees. The change temporarily limits the approval process of PPP loans to those businesses, giving them an easier path to assistance than their larger competitors. This window is only open until March 9th, so time is of the essence for this prospecting opportunity.
Are you looking for resources designed to help you offer these comprehensive tax return reviews? IAMS is currently putting together our 1040 Overlay Kit. This complimentary tool is updated for 2021 and will help you identify financial protection and planning needs in an easy and effective manner. The 1040 Overlay Kit will be available soon, so follow us on Facebook and stay in touch with our marketing team to make sure you get yours.
In the meantime, now is a good time to brush up on the changes made to the tax code for 2021. Do so with our free 2021 Tax Facts Sheet, a handy reference tool that outlines the 2021 tax code in an easy-to-read, “cheat sheet” format. The 2021 Tax Facts sheet includes:
- Updates to income tax brackets
- Updated contribution limits to 401(k)s and IRAs
- Estate tax credit increase
- Social Security and Medicare changes
Request yours today by clicking the link below.