One of the most valuable things we do for new clients—especially this time of year—is take a deep dive into their investment statements and past tax returns. It’s not uncommon for us to uncover errors or oversights that could be costing them thousands of dollars unnecessarily.
Here are a few of the most common mistakes we find:
1. Qualified Charitable Distributions (QCDs) Not Reported Correctly
We regularly see cases where clients make QCDs—charitable donations made directly from their IRA—but their accountants fail to report them correctly on their tax return. This means the distribution is taxed as ordinary income, even though it shouldn’t be. The result? They end up paying more in taxes than necessary.
The good news is that these mistakes can often be corrected by amending the return—putting real money back into our clients' pockets.
2. Missing Cost Basis on Stock Sales
Another issue we encounter frequently: 1099s that report stock sales with no cost basis listed. When this happens, the IRS assumes the entire sale amount is a gain—unless the correct cost basis is reported.
A recent example: We met a new client whose 1099 showed $95,000 in stock sales with no cost basis. Left uncorrected, their tax return showed $95,000 of capital gains income they didn't actually owe. Through careful research and conversations, we were able to determine the real cost basis was $70,000. That one correction reduced her taxable income from $160,000 to $90,000—and saved her thousands in taxes.
3. TurboTax Miscalculating Social Security Taxability for 2024 Filers
This one’s a bit newer, but it’s something we’re seeing in real time: for certain 2024 filers, TurboTax has been miscalculating the taxable portion of Social Security benefits. It's not affecting every return, but it's happening enough to raise red flags. If left unchecked, it could lead to an inflated tax bill or even an unexpected IRS notice down the road.
Why This Matters
For many new clients, these aren’t just clerical errors—they're expensive mistakes. And while DIY tax software and well-meaning accountants have their place, they don’t always connect the dots between tax strategy, investment planning, and retirement income.
That’s where we come in. Whether it’s correcting a return, identifying missed opportunities, or coordinating across your financial team, we help ensure nothing slips through the cracks.
Bottom Line: A Second Set of Eyes Can Pay Off—Literally
If you haven’t had someone review your past tax returns or investment statements in a while, it might be worth a look. Sometimes a small tweak can make a big difference.