Tax season is a dreaded time of year for some people, but many others use the time to focus on their broader financial circumstances.
A new poll released by Charles Schwab found that 47% of investors surveyed (and 50% of those with $250,000 or more in assets) believed tax planning and financial planning were one and the same activity, and 44% said tax planning significantly influenced how they invested and managed their wealth over time.
Koski Research interviewed 1,066 general investors in mid-February, using a third-party online panel. Participants were screened to ensure they had minimum investable assets of $50,000.
“Tax season is a time of year when people have all their financial information top of mind, so it’s the ideal time to pay attention to broader financial goals and plot how you plan to get there,” Joe Vietri, head of Charles Schwab’s retail branch network, said in a statement.
Forty percent of all investors polled reported that they had a written financial plan, and 52% of those said tax planning was a specific component of their plan.
The survey found that 50% of those with a financial plan focused on their total financial situation during tax season, compared with 31% who did not have a plan.
Among investors who incorporated tax planning into their financial plan, 48% said they felt “extremely confident” as they prepared their taxes.
The survey showed that among the 59% of respondents who used a financial advisor to help them with their investments, 42% were “extremely confident” in preparing their taxes, compared with 31% who did not use an advisor.
Moreover, 66% with an advisor believed they were doing everything possible to reduce the tax effect of saving and investing, compared with 48% without onr.
“Having a plan or getting advice has a positive impact on investors’ confidence, both in the short term on topics like annual tax planning, but also when it comes to longer term goals like saving for retirement,” Vietri said.