2011 Federal Tax Return: Are you getting the most out of your completed tax return?: An Article Authored by Richard LaCross from KLR - Accounting Firm Boston, Massachusetts, Providence, Rhode Island


2011 Federal Tax Return: Are you getting the most out of your completed tax return?

posted Feb 28, 2012 by Richard LaCross

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It’s that time again when your busy life becomes even busier with the chore of gathering tax information and sending it off to your CPA.  For many, the thought of dealing with gathering tax information is about as pleasant as going to the dentist.

On the other hand, reviewing your tax return after it’s completed can save you some time to review your finances and update your financial plan. You might be asking yourself, do I have a financial plan?  Yes, you do. Whether you have made a deliberate effort at planning, or have just made financial decisions as they come up, you have a plan.  Using your tax return is a great way to reconcile your finances annually.

The following are examples of some questions to consider as you review your tax return to see if these particular areas should be looked at more closely.

Possible Cash Flow Issues:

  • Is the income that appears on your tax return adequate to meet your current family needs plus saving for the future?
  • Is your investment income increasing or decreasing from previous years?
  • Are you current with income tax payments?

Possible Investment Planning Issues:

  • Does Schedule D disclose a lot of capital losses? If so, there might be an opportunity to improve your investment strategy.
  • Is all of your interest income taxable?  Have you considered tax-exempt investments?

Possible Risk Management Issues:

  • Is your family income from only a one wage earner?  Do you have adequate disability and life insurance in place?  How old are the policies?
  • Are you reporting rental income from a rental property on Schedule E? Do you have adequate insurance?  Do you own the property individually?
  • Are you in a high risk profession?

Retirement Planning:

  • Are you maximizing your retirement options?
  • Based on your level of income, wealth and age, are you on track toward funding your required retirement income?

Education Funding:

  • Are funds set aside to fund your children’s college?

Estate Planning:

  • When was the last time you reviewed your beneficiary designations?
  • Do you have a will?  If so, when was the last time it was updated?
  • Assuming you have income from a family business, do you have a business succession plan in place? 

There are many more questions that could be raised depending upon your situation.  If you can’t devote hours to review your finances, my suggestion is to review your tax return as a time saving approach. Carve out about an hour of time to review your tax return while focusing on your personal finances at the same time. Determine if there are any important areas related to your personal situation that could use some attention.

If you are not comfortable with reviewing your tax return, give your CPA a call to have them assist you. Most CPA’s have some level of experience or can refer you to someone who is an experienced financial planner. 

Here at KLR, KLR Wealth Management frequently helps KLR client’s who are looking for assistance with their personal financial matters.

If you have any questions as it relates to this article or your personal situation, feel free to contact Richard LaCross or call 888-KLR-8557.