Many people think that a financial advisor’s primary function is to provide timely investment management and advice. If only it were that easy. Most of the questions I receive are somehow related to the stock market. While investment management is part of what I do, it is not the most valuable service that I provide. As a professional, I believe that I should always be growing, learning and improving. I owe it to myself, my family, and my clients.
The latest chapter in my professional development story revolves around the topic that I get the second most questions about. Taxes. A couple months ago I started working toward my EA (Enrolled Agent) certification. “What is an EA?” you ask. The definition straight from the IRS website is this:
An enrolled agent is a person who has earned the privilege of representing taxpayers before the Internal Revenue Service by either passing a three-part comprehensive IRS test covering individual and business tax returns or through experience as a former IRS employee. Enrolled agent status is the highest credential the IRS awards. Individuals who obtain this elite status must adhere to ethical standards and complete 72 hours of continuing education courses every three years. Enrolled agents, like attorneys and certified public accountants (CPAs), have unlimited practice rights. This means they are unrestricted as to which taxpayers they can represent, what types of tax matters they can handle, and which IRS offices they can represent clients before.
Who would willingly sign up for this torture? To clarify, my objective is not to prepare taxes or represent anyone in tax court. It is simply to provide more value from a tax perspective. I have always said that I’m no tax expert, I just know enough to be dangerous. Until you dunk your head under the water you really can’t see everything that’s swimming beneath the surface. My opinion thus far is that our tax code is insanely and unnecessarily complex. It’s easy to become disgruntled or cynical when reading this stuff, but the bottom line is this: It is our obligation as law-abiding, obedient citizens to render unto Caesar that which belongs to Caesar. Take note, somebody important said that.
We live and work in this great country and therefore must play by the rules. That is, to the point that our conscience is seared. If the law demands that we do something immoral, we have a higher obligation not to obey. Let me be clear. I am not advocating that anyone evade taxes. However, that does not in my opinion, mean that paying more taxes makes you a better citizen. It does not mean that you are somehow more of a patriot.
If you seriously looked into what lawmakers do with your hard-earned tax dollars, you’d go crazy. From putting fish on treadmills to finding out if dinosaurs could sing, the absurdity is infinite. No kidding, read this article:
https://www.gobankingrates.com/taxes/tax-laws/shocking-things-taxes-pay-for/
While these examples are somewhat comical and innocuous, sadly there are much more heinous agendas that are being funded by taxes. Here’s the gist. There is nothing morally wrong with taking advantage of money-saving opportunities provided in the tax code. On the contrary, this could fall in the category of being a good steward. For example, if you could redirect funds from financing the study of monkey drool to instead funding your local homeless shelter, you would do it, right? If you could stock your local food bank instead of researching truffles and caviar, you would, wouldn’t you?
I’ve learned a lot in a short amount of time, but one thing is very clear. A good tax preparer is worth their weight in gold. I see a lot of folks toiling away to save a couple hundred dollars on tax preparation and miss out on potential thousands in savings. This is not just about keeping more of your hard-earned money, novel as that concept may be. I would guess that most of us could find more justifiable ways to spend or share our blessings than what the federal government has come up with. After all, who needs to spend money on research to know that frat guys like to party?