I've been hearing the term tax strategist more and not sure if it’s just a buzzword.
CPAs handle filing and compliance, but is a strategist actually different?
Has anyone worked with both?
CPA vs tax strategist, what's the real difference?
byu/LeftTechnology6389 intax
Posted by LeftTechnology6389
7 Comments
If you ran a business, own rental property, own shares of small businesses not through stock exchange, or have vast amounts of investment income, then you should be getting tax strategist. Because in those situations you can adjust income, distributions or depreciation (legally) to help generate losses to offset gains or the other way around.
If you have a W-2 income and investment income put into stocks or mutual funds that are not in your 401k, then the only tax strategies you need to do is choose your investments based on after tax return, because sometimes municipal bonds and the like will allow you to not pay taxes on their returns while corporate bonds you pay full tax on their returns.
A CPA is an accountant, not necessarily versed in tax law.
Strategist is definitely a branding thing but that being said tax planning is definitely a service line that’s different than pure compliance.
Compliance is just making sure the tax return is correct given after the fact information.
Planning is running the numbers before the year is over to see if there’s tax saving opportunities. Sometimes yes, sometimes no but never hurts to check since sometimes little moves can create massive savings.
I offer planning complimentary to all of my tax clients since I don’t like having the conversation when the year is over of “well, had you just done this then you could have saved $X.”
I’ve worked with both, and Fortitude Strategic Wealth was definitely more focused on planning throughout the year instead of just reacting at tax time.
The real strategy part happens before you make decisions, not after everything’s already done.
I think it’s for people that didn’t get into accounting/tax/CPA but are trying to play the tik tok trend and think they can just read shit online and designate themselves as tax strategists. I think some of them prob don’t even have college degrees. Everyone claims they’re something they’re not now like day traders on tik tok that actually only make money by selling courses
For me the CPA does the accounting and actually prepares taxes
My tax strategist works in conjunction with my financial planner to help make and execute an overall investment strategy that takes into consideration the impact on taxes over multiple years
The combo generate a great deal of tax free income along with keeping me under threshold to avoid tax every year
The account just takes the results and knows how to minimize tax every year burden after the fact with nominal guidance on changes in tax laws and opportunities
I feel like a lot of people just hire for the wrong thing without realizing it.