Tax season is a prime time of year to illustrate your value to clients by helping them save money from the clutches of the taxman. Making it a family affair can strengthen those benefits to you and your clients, says Tim Cestnick, president of Waterstreet Group Inc. in Toronto.
“Taking a family approach to tax season can be a really big opportunity for advisors,” Cestnick says.
Benefits could include an increased share of wallet and a step toward the intergenerational wealth transfer, Cestnick says. Tax season, he adds, often encourages families to reevaluate and restructure various financial holdings to obtain tax advantages.
Cestnick offers the following ways you can make tax season a family affair:
> Look forward
Instead of using the spring months to recap the 2012 tax season, use that time to plan the 2013 tax year.
Any issues arising from a 2012 return will be fresh in your clients’ minds.
So, take some time to develop one or two fresh strategies to help your clients save on taxes in the new year — particularly if you can involve the entire family. This strategy will give you reason have the family meet with you over the course of a few months.
> Encourage children to donate
One area in which you can help clients in their 2013 returns is through charitable donations. Last month’s federal budget introduced a new tax measure that will enhance tax relief to first-time charitable donors.
For example, if your client’s children give money to charity, as first-time donors, the children will be entitled to receive an additional 25% in tax relief over and above the usual tax benefits for that donation.
“You can encourage your clients to get their children involved in giving,” Cestnick says. “Not only does it teach them something about giving back, but it will also provides enhanced tax relief.”
> Encourage strategic philanthropy
The next level, beyond one-off charitable donations, Cestnick says, is to discuss strategic philanthropy with your clients.
For example, ask your clients whether they are satisfied with their charitable giving plan. If they are, then fine. But if they would like to start giving more or making changes to their plan, you can provide the advice they need, Cestnick says.
“This is an important aspect of financial planning,” he says. “A small change in the rules can lead to an entire dialogue with clients on whether they are satisfied with what they are doing with their money.”
> Transfer tax credits
While your client might be entitled to certain tax credits, there is a chance that another member of the family might be able to make better use of them to lower their tax burden.
Be sure to familiarize yourself with the assortment of tax credits that can be transferred from one family member to another.
This list includes: Tuition, education and textbooks tax credits; pension credits; disability credits; donation credits; and medical expenses, to name a few.
Next: Tax credits your clients should know about.