Bonus Section: Financial Advisor Referrals from the 1st Two Pages of a Tax Return (PT4)

This is the second of a six-part series of posts on how to use the first two pages of a tax return to identify referral opportunities. Click here to go to the beginning of the series. For the fifth part of the series, click here.

When reviewing clients tax returns, it’s important to look in the deduction category. This shows the number of withholdings. If this number is large for example the client is claiming four dependents, that could mean they are not maxing out their pre tax retirement investments, and could open up the opportunity to make an introduction to your financial advisor partner to review options. Now, if the number in this section is low, for example 0, and they are maxing out their pre-tax retirement plan, then you may want to suggest they claim more so they have the opportunity to invest those earnings and start earning interest on that money sooner. I always say, “Why let the government earn interest on your money, when you can?”

Now, It’s easy to tell how much is being invested in someone’s 401k for example, just by looking at box D on their w-2 form. All of these examples create the opportunity to introduce a financial advisor. Just make the suggestion using the referral generator.

“Mr. Jones, looking at your tax return I see you aren’t claiming any withholdings from your paycheck. It may make sense to claim a few dependents to be more productive with your earnings. How is your relationship with your financial advisor who can help you with this?

LINE 13 & 14- (these 2 areas address capital gains and losses. This should basically follow the same concepts as the taxable interest section when it comes to referring. Great questions to ask are:

  • Are you earning enough on these accounts?
  • Is it possible to save on taxes by moving to a tax-deferred account for long term growth?
  • Have you thought about moving to a more tax advantaged strategy?
  • And how is your relationship with your financial advisor who can help you with this?

LINE 15 A & B- Ok, if there is a number listed here, and it is taxable, that means the client withdrew the money for something. If it is not taxable that means it was a roll over, from a job change for example. If you see that the person is younger, there could be a problem or something that needs more elaboration. If the client is older it may have been a distribution.

The main point is that all of these scenarios create the opportunity to ask the referral generator question. We aren’t necessarily giving concrete advice here, we’re just bringing some potential opportunities up that create an easy transition to introducing an expert to help them. Noticing these opportunities really makes it easy to say, “how is your relationship with your financial advisor who can help you create a strategy?”

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