7 Financial Planning Tips From a Tax VIP

Bill Harris, the tech entrepreneur and tax expert, has been working on tax preparation and planning for more than 30 years. In his extensive experience, there’s probably no other single topic as important for financial advisors and their clients to master.

Yes, investment returns matter a lot, as does cultivating a commitment to saving and staying the course when markets turn south. In the end, though, it’s not what clients earn that count but what they keep after paying taxes.

The difference between optimal and suboptimal strategies can be surprising, Harris notes, amounting to tens or even hundreds of thousands of dollars in added lifetime wealth or legacy value for the typical client.

Harris, the former head of TurboTax, recently spoke with ThinkAdvisor about his own history as a tax entrepreneur, as well as tax management strategies that can make a significant difference in what, how and when clients pay.

Perhaps the most important lesson for advisors and clients is to recognize the difference between simple tax preparation and holistic tax planning, said Harris.

The former is what people do after the fact, when there are very few potential strategies that can make a big difference come tax day. The latter is what’s done in advance to manage the tax burden as wealth accumulates over time, Harris explained, and it is quickly becoming an essential deliverable for today’s wealth managers.

See the accompanying slideshow for a summary of seven key tax planning tips shared by Harris, who was the co-founding CEO of PayPal and recently wrote “Investment Tax Guide: How to Slash Your Taxes.”