In 2022, we reviewed 203 client tax returns (for the 2021 tax year) and caught approximately $162,650 worth of errors and omissions in total – and that wasn’t even our biggest catch. When a prospective client contacted us to get a second pair of eyes on his tax plan, we noticed something significant.
“Right away, I could tell something didn’t look right – something was off,” explained John Vance, President and Visionary of Vance Wealth, “so we put his information through our standard due diligence process and immediately identified a deduction he could have filed for but never did. We then recommended he work with his CPA to amend his returns from the past 3 years, and he was refunded more than $607,000 in overpaid taxes. This is obviously a massive exception, but it goes to show why it’s so important to have a second pair of eyes on your return – and a team that works together in order to create the best outcomes for you.”
At Vance Wealth, we believe that collaboration drives success. That’s why we work closely with each client’s team of professionals, including their chosen accountant or tax preparation professional, to support them however we can and, ultimately, produce better outcomes for the client.
To help you create the best outcomes possible, here are the three types of costly errors we find most often:
More often than not, the most costly tax mistakes we see are not errors but omissions. They’re missed opportunities for long-term planning, strategic deductions, and cutbacks on your lifetime tax liability. In fact, the easiest way to make a mistake on your tax return is to skip the crucial planning steps recommended by your team of trusted advisors. “At Vance Wealth, tax planning is a consistent process that we work on throughout the entire year,” John explained. “Once your big-picture plan is in place, we meet with you annually to check in and make any necessary course corrections. Then, when it comes time to file, we request a draft of your tax return before it’s submitted, to ensure your tax plan is being fully implemented.”
Back in the day, our clients would collect all their documents and receipts throughout the year and bring in a physical file of paperwork to review. That meant tax professionals could see everything for themselves and report the information accurately. Today, with the digitization of the tax process and our everyday lives, our clients rarely have physical copies of every receipt or form.
“How Collaboration Can Save You From Costly Tax Mistakes” “With the switch to electronic documents, sometimes our clients may report incorrect or incomplete data because there’s less of a paper trail, and they just don’t know what they don’t know,” John explained. “If the accountant doesn’t have the proper data, then the return won’t be accurate. Or, the client could have submitted the information, but the accountant interpreted it differently. A tax return is really only as good as the data the accountant has to complete it, which is why it’s so important to include your financial advisor in this process.”
- Human Error
Even if you have a comprehensive tax plan in place, and all your information is accurately reported, there’s still a chance of human error. By working with a team of professionals, however, this responsibility doesn’t fall on the shoulders of just one person.
“The client could misreport or omit data. The accountant could misinterpret data. And anyone involved in the process could make a simple human error when entering data,” John explained. “That’s why it’s so important to adhere to a methodical due diligence process that involves your entire team. No one is perfect, but by collaborating in the best interest of the client, we work to ensure that errors are prevented or caught on all fronts.”
If you want to avoid these simple yet costly tax errors, we encourage you to schedule a complimentary tax plan review with one of our Wealth Advisors – before it’s too late. Our team of advisors gets busier as we approach year-end, so the time to act is now. To schedule your consultation, please contact our office at 661-775-0950.
The information provided is for educational and informational purposes only and does not constitute advice. Vance Wealth does not provide tax or legal advice. You should contact your tax advisor and/or attorney before making any decisions with tax or legal implications.