Tax Preparation vs. Tax Planning: Why High-Net-Worth Retirees Need Both
Episode 20
Tax Preparation vs. Tax Planning: Why High-Net-Worth Retirees Need Both
Published on January 28th, 2026
Episode 20 of Retirement Tax Matters kicks off a two-part series exploring why high-net-worth retirees need a coordinated team at their tax table. Many retirees feel stuck playing the middleman between their CPA and financial advisor (or all of the roles for the DIYer!), carrying the weight of complex decisions alone. In this episode, Garrett and Adam break down the critical difference between Tax Preparation (the actual process of filing your tax-return by reporting what transpired in the prior year) and Tax Planning (looking through the windshield to strategize for the future). They discuss why being myopic about minimizing taxes on your current tax return can run often conflict with financial planners focused on minimizing lifetime taxes through strategies like Roth conversions. By ensuring your CPA and financial planners are working together, retirees can relieve the pressure of making high-stakes decisions in isolation and ensure no opportunity is missed before the December 31st deadline.
Key Tax Planning Questions
Question 1: What’s the difference between tax preparation and tax planning?
These two concepts serve very different functions in your financial life.
Tax Preparation is the process of reporting history. It is the annual tradition of collecting forms (1099s, W-2s) and passing them off to your tax preparer to accurately calculate and report your tax liability to the IRS for the prior year. It is reactive and compliance-focused. While a good tax preparer might offer a tip or two during filing, their primary role is to ensure accurate reporting of what’s already happened.
Tax Planning is proactive and forward-looking. Instead of waiting until April to see what happens, tax planning starts early in the calendar year and focuses intently on making smart financial planning decisions before the December 31st deadline of the current year.
For HNW retirees between $2M-$8M, effective tax planning involves estimating your year-end taxable income in the fall—when data on dividends and capital gains becomes clearer—to answer critical questions like these listed below, before the window closes:
How much room is left in your current tax bracket (e.g., the 24%) before jumping to the next one (e.g., 32%)?
Are you close to triggering a Medicare IRMAA surcharge that could raise your premiums?
Should you execute a strategic Roth conversion to fill up a lower bracket or a future tax bracket increase?
Waiting until tax preparation season often means missing the opportunity. Tax planning empowers you to optimize your tax situation before the year ends.
Question 2: Who handles Roth Conversions: my advisor or accountant?
This is one of the most common questions we hear, and the answer has evolved significantly over the last decade. While the short answer is that both should be involved, in my opinion, the most effective approach usually involves your financial planner taking the lead on the recommendation and your tax preparer verifying the execution.
Here is why this dynamic exists and how it should work for a high-net-worth retiree:
The Historical Tension For years, there was a confusing standoff in the industry. Financial planners were often trained to avoid giving tax advice for compliance reasons, while the businesses of tax preparers (whether CPAs or Enrolled Agents) were built for tax preparation and reviewing last year’s data, not necessarily projecting forward for in-depth tax planning This left the client stuck in the middle, trying to facilitate a forward-looking decision like a Roth conversion without anyone wanting to give a specific dollar amount recommendation.
Why Your Financial Planner Should Be Considered To Lead A proactive Roth conversion is not just a tax decision; it is a retirement income and investment decision. A tax preparer typically lacks access to your real-time investment data—such as year-to-date dividends, interest, and unrealized capital gains—that is critical for an accurate projection, especially as your non-IRA brokerage accounts can be so large it can tip you into a new tax bracket or penalty threshold.
Furthermore, a CERTIFIED FINANCIAL PLANNER® professional typically has a business model built on relationships rather than volume. A typical tax preparer's office is often structured for speed and transaction volume during a compressed filing season, serving hundreds of clients in a few months. In contrast, a financial planning firm is generally structured to serve fewer families with more depth and time throughout the year. This structural difference allows the planner to have deeper context about your life: your long-term health, your legacy goals for your children, and your cash flow needs.
The Ideal Workflow In a perfect scenario, your financial planner does the heavy lifting of the projection and proposes a specific conversion amount. They then communicate directly with your tax preparer to verify the calculations and agree on the estimates before the transaction is processed.
A Note for DIYers and Those with One Professional If you handle your own taxes and planning, you are free to do as you please—the weight of the decision rests solely on you. If you only have a tax preparer, that is certainly better than nothing, but adding a financial planner to your team can lift the burden of these complex decisions.
Conversely, if you have a financial planner but still prepare your own taxes (which is common!), you should take their recommendations seriously, but remember the final execution is your responsibility. However, as your wealth grows into the $2M–$8M range, many retirees find it is time to delegate tax preparation to a professional. You may enjoy it now, but there may come a day when you can't, or you simply discover you enjoy other aspects of retirement far more than filing tax returns. See Episode 16 on The Downsides of Tax Minimization
Question 3: My CPA keeps telling me to defer income to lower my tax bill this year, but my financial planner is telling me to accelerate income through Roth conversions to save money over my lifetime. How do I get these two professionals on the same page so I’m not stuck in the middle trying to decide who is right
The simple answer is that you need to resign from your role as the middleman immediately! Your job is not to arbitrate complex tax planning advice from two professionals; your job is to get them on a conference or Zoom call and let them hash out what is truly in your best interest.
This conflict often arises not because one professional is wrong, but because they are operating with different data sets and different definitions of success.
The Incentive Gap Most tax preparers I’ve interacted with are excellent at what they do, but their client relationships can be built on immediate gratification. Clients are generally happiest when they see a lower tax bill this year or a larger refund check. Therefore, a tax preparer is naturally incentivized to find every possible deferral strategy (like a SEP IRA contribution) to minimize your current liability. They could think a client will feel pain leaving their tax preparation experience if they tell you to write a separate $40,000 estimated tax check for a Roth conversion on your way out the door.
On the other hand, a fiduciary financial planner is focused on your long-term outcome. They are looking at your future Required Minimum Distributions (RMDs), your surviving spouse’s potential tax bracket, and your legacy goals. They are willing to inflict a little tax pain today to prevent a tax increase ten years from now.
The Dangers of Siloed Advice However, financial planners have their own blind spots. A planner who recommends a massive Roth conversion without ever reviewing your tax return is being reckless. They will miss how that additional income impacts your Qualified Business Income (QBI) deduction, triggers higher Medicare costs, causes your marginal tax to increase, or interacts with unique items like real estate depreciation.
The Solution If you have a net worth between $2 million and $8 million, you likely should not be making these decisions in isolation. The landscape has changed, and the siloed financial professional model is outdated.
Step 1: Ask your financial planner to coordinate a brief joint meeting or call with your tax preparer in the fall (before December 31st).
Step 2: Let them share their perspectives. The tax preparer brings the technical compliance expertise, and the planner brings the long-term strategic context.
Step 3: If either professional is too rigid or busy to have this conversation, it may be time to evaluate if you have outgrown them.
There are excellent tax preparers and financial planners who welcome this collaboration. Your most important responsibility isn't to know the tax code—it is to ensure the people you hire are talking to each other.
Full Episode Transcript
Adam: Good morning and welcome to Retirement Tax Matters. I'm Adam Reed, and this is Garrett Crawford. Thank you for joining us on our podcast where we talk about tax-return-driven financial planning for high-net-worth retirees. Each week, we bring in a new topic and something fun to talk about. We tackled some trust accounts last week, including different ways to gift and handle giving. I thought that was a really good episode.
Garrett: I enjoyed prepping for that one. It was a good one. If you missed it, you should go check it out.
Adam: Well, it's fun too. Most clients we work with in that $2 million to $8 million range find that giving is a big part of what they’re doing. Many of them were such good savers that it’s hard to switch to spending. They get into a position where they can't even spend it fast enough, and the interest goes crazy on them.
Garrett: Oh, it’s hard to use it all.
Adam: Once you go past that $2 million number, it goes quick. Switching gears a little bit—but still focusing on tax-return-driven financial planning—we are always talking about taxes, efficiency, and planning. This week, we're starting a discussion that I think will be a two-part series.
Today and next week, we’ll discuss who should be on your tax team in retirement if you're in the space we coach. Is it a CPA? Is it an EA? Is it a DIY approach? What does that look like, and what recommendations would we have?
I think we should start with the difference between what we do and what tax preparation is. Some people will say, "Hey Garrett, Adam, can you do my taxes?" I say, "No, we can't." Then they say, "I thought you did tax-driven planning. You're the tax guys, right?"
Garrett: Right.
Adam: I tell them it’s a little bit different. Maybe you can give us some clarity on what a tax preparer does versus what we do, and then we can dive into how we all work together with synergy for a client.
Garrett: I think that would be a great foundation. For those watching or listening on Apple or Spotify, the core idea here is the difference between tax preparation and tax planning. Most people just think about "getting their taxes done."
Tax preparation is probably what you are most familiar with. Whether you've done it yourself or outsourced it to an accounting office, it is the process of taking all those forms delivered to your mailbox. Since it’s January 2026, our clients are going to start receiving 1099-R forms for IRA distributions, showing the money they pulled out or Roth conversions they performed. They’ll also receive 1099s for brokerage accounts and W-2s if they’re still working.
Most people are familiar with collecting these forms and either putting them into TurboTax or delivering them to a CPA to prepare the return. As many have found by experience, when you show up to deliver those forms, there is usually not a lot of tax planning happening. You check the boxes on the checklist—job changes, retirement, starting Medicare—and they take care of the filings. You get a notification that your tax preparation is done, they mail you a copy, and everything is sent to the IRS.
Adam: To double-click on that, my dad is a CPA. In January and February, you can still talk with him, but by late February or early March, they have someone whose job is to intercept you. You aren't supposed to go further into the office to talk to the pros during that time. You're absolutely right.
Garrett: They are busy and get a lot done. It’s a wonderful profession, and you’ll never hear me say that CPAs aren't needed or that a financial planner is all you need.
Alongside tax preparation is this idea of tax planning. Tax planning is about taking what we know about your situation today—your Social Security, your pension, and the dividends and interest from accounts at Schwab or Fidelity. We take everything happening right now to estimate what your taxes will look like on December 31st of this year.
At RetirementTaxMatters.com, our catchphrase is "tax-return-driven financial planning." We try to anticipate your income for the year so we can help you consider opportunities before it's too late. Tax preparation is like looking in the rearview mirror at what happened last year to report it to the IRS. Tax planning is looking at your situation now to preemptively maximize your funds and pay only as much tax as necessary to leverage efficient growth moving forward.
Adam: That's helpful for understanding why it makes sense to have us at the table with a CPA or tax preparer. We work in tandem: looking back to get things filed and looking forward to work synergistically.
One challenge we see is a conflict of goals. I hear this from friends all the time: "My CPA saved me so much money this year! I got a huge refund!" They are excited about that specific year. However, we are looking 35 years down the road. We want to know a client has the money they need to live their lifestyle for the rest of their lives. A CPA might want to minimize taxes for this single year, while we might want to accelerate income to squeeze money into a lower tax bracket now to save more over a lifetime. How do we make those things work together when they seem to be in conflict?
Garrett: I want to share a story from a few years ago that highlighted this need. We had a client who clearly needed a large Roth conversion—let's call it $100,000. Their income was going to increase in the future, and taxes were going to be higher forever than they were this year.
As CFP® professionals, we knew the opportunity existed, but we were trained to be careful not to give "tax advice" because we aren't CPAs. It is illegal for me to represent a client in court or prepare tax returns. We were so nervous about giving tax advice that we told the client, "There's a big opportunity here. Go work with your CPA to nail down a final number, and then let us know."
The client came back and said, "I asked my CPA how much I should do, and he said he didn't know because he didn't know what my investments were doing this year." While the accountant is great at their job, they don't have real-time access to investment accounts like we do. A good financial planner can log into the portfolio management system and see exactly how many dividends have been paid year-to-date and whether they are qualified or ordinary.
I learned that while CPAs have the final say on the filing, the financial planner is usually the one most aware of what is happening during the current year. We want to partner with the CPA to help clients nail down those amounts.
Adam: There are two other benefits to this. First, it saves you money by letting us handle the planning projections as part of our service. If you ask a CPA to sit down for several hours to look at IRMAA limits and tax brackets, they will bill you hourly. With us, that’s already baked into what you're paying.
Second is the timing. Most people don't see their CPA before the end of the year. By the time you sit down in January or February, many ships have sailed. You can't do a Roth conversion for the previous year once the calendar flips.
Garrett: I brought on a client in early December with a huge Roth conversion opportunity. We reached out to their CPA, but the CPA was already on Christmas break and wouldn't do anything else. That’s the nature of waiting until it’s too late.
Adam: It makes sense to work together. We need both perspectives: being efficient this year while making sure we're on the right path for the long term. We don't want to take the scenic route on the tax journey. We also really value tax preparers; they aren't the "little brother" at the bottom of the table. They have a vital place in guiding and executing these decisions.
Garrett: One last point: many successful people have done their own taxes for 30 years using TurboTax or even by hand. The challenge there is that you're playing all the roles yourself. When these clients come to us, we use our software to make recommendations—like a $150,000 Roth conversion. Even if they trust us, shouldering that decision alone feels like a "brick in their backpack."
If you have a high net worth, you can afford not to go it alone. When you have a fiduciary financial planner and a CPA agreeing on a direction, it takes the weight off your shoulders.
Adam: That’s a great setup for the next part of the series. We’ll talk about who makes the most sense to work with depending on your complexity. We’ll also cover "yellow flags" that might mean you need more expertise, and we'll discuss pricing and what to expect in different price ranges.
Garrett: DIY is free, right? You get TurboTax for $50 at Costco. But there are jumps once you need people.
Adam: We'll help people understand what to expect from those relationships so you don't underutilize your planner or over-expect from your preparer.
You guys know our spiel. We have free resources in the description below, including checklists for people entering retirement. There will be more to come in 2026. Garrett loves spending his free time creating these resources.
Garrett: Guilty.
Adam: We appreciate you listening. Check out the website—it got a facelift for the new year. Our goal is to be here every week this year. We appreciate you tuning in. I’m Adam Reed, and this is Garrett Crawford. This is Retirement Tax Matters.