BMO Harris Financial Advisors Tax Study: Seventy-Nine Percent of Wisconsinites Surveyed Confident in Tax Planning, But Many Are Not Tax-Smart When Investing

Marketwired

MILWAUKEE, WI--(Marketwired - Mar 28, 2014) -

  • Forty-six percent of those surveyed in Wisconsin do their own taxes
  • The overwhelming majority are confident that they take advantage of all tax breaks, but most admit they are not tax savvy when investing
  • Of those expecting a refund for the 2013 tax year, more than one-third plan to save or invest the money

According to a study issued today by BMO Harris Financial Advisors (BHFA), 46 percent of those Wisconsinites surveyed prepare their own tax returns. Further, the vast majority (79 percent -- below the national average of 83 percent) are confident that their completed tax returns will take advantage of all of the tax deductions, tax credits or other tax savings that may be available to them.

However, despite this sense of confidence, two-thirds (61 percent) of respondents in Wisconsin admitted they are not knowledgeable about tax smart investment solutions designed to reduce their overall tax liability, including protecting their investments from a tax perspective and transitioning them in a tax-efficient manner to the next generation. Further, the study found:

  • Just over a quarter (28 percent) understand how capital gains are taxed (below the national average of 44 percent).
  • Only one-third understand how dividend income is treated from a tax perspective (far below the national average of 47 percent). 

"It's encouraging that so many Wisconsinites feel confident as they prepare their tax returns before the mid-April filing deadline," said Mike Miroballi, President, BMO Harris Financial Advisors. "But it's important to understand the full picture on how you are being taxed -- especially with investments. Knowing how you are being taxed before making an investment decision can have a significant impact on net returns."

Mr. Miroballi noted that a financial professional can play a critical role in making an investment portfolio more tax efficient. For example, BMO Harris Financial Advisors works with clients to determine investment solutions which best fit their specific needs and goals. This may include reducing one's tax liability and transitioning assets to the next generation in a tax-efficient manner.

Wisconsinites and their tax refund plans

The study also examined what those who expect a tax refund plan to do with the money:

  • Thirty-five percent will save or invest (compared to 42 percent nationally).
  • Twenty-nine percent (below the national average of 35 percent) will cover household bills and/or reduce their debt load (credit card balances and debt other than mortgage).
  • Sixteen percent will fund vacations or purchase leisure items.
  • Seventeen percent will spend on home renovations.
  • Six percent will donate to charitable causes.

"It's encouraging to see that so many in our state who are expecting a tax refund will be looking to the future and saving or investing the money or will use it to reduce their overall debt," said Mr. Miroballi.

Key National Findings

  • Forty-eight percent of those Americans surveyed are preparing their own tax returns.
  • The vast majority (83 percent) are confident that their completed tax return will take advantage of all tax breaks.
  • Just under half (45 percent) of the respondents admitted they are not knowledgeable about tax-smart investment solutions designed to reduce their overall tax liability.
  • Just 44 percent understand how capital gains are taxed and only 47 percent are familiar with how dividend income is treated from a tax perspective.
  • Forty-two percent of those Americans surveyed who anticipate getting a tax refund plan to use the money to pay household bills/reduce their debt load; 35 percent will save and/or invest the money; 16 percent will fund vacations or the purchase of leisure items.

The survey was conducted by Pollara with an online sample of 1,000 Americans 18 years of age and over, between March 7th and March 10th, 2014. A probability sample of this size would be accurate to +/- 3.1%, 19 times out of 20.

About BMO Harris Financial Advisors
BMO Harris Financial Advisors, Inc., offers a comprehensive range of investment advisory products that include financial planning strategies and estate planning strategies to meet the financial needs of high-net-worth clients. Offices are located throughout the U.S. Learn more at www.bmoharris.com/financialadvisors.

BMO Harris Financial Advisors(SM) is a trade name of BMO Harris Financial Advisors, Inc. Securities, investment advisory services and insurance products are offered through BMO Harris Financial Advisors, Inc. Member FINRA/SIPC. SEC-registered investment adviser. BMO Harris Financial Advisors, Inc. and BMO Harris Bank N.A. are affiliated companies. Securities and insurance products offered are: NOT A DEPOSIT - NOT INSURED BY THE FDIC OR ANY FEDERAL GOVERNMENT AGENCY - NOT GUARANTEED BY ANY BANK - MAY LOSE VALUE.

Estate planning requires legal assistance which BMO Harris Financial Advisors and its affiliates do not provide. Please consult with your legal advisor.

United States Department of Treasury Regulation Circular 230 requires that we notify you that this information is not intended to be tax or legal advice. This information cannot be used by any taxpayer for the purpose of avoiding tax penalties that may be imposed on the taxpayer. This information is being used to support the promotion or marketing of the planning strategies discussed herein. BMO Harris Financial Advisors and its affiliates do not provide legal or tax advice to clients. You should review your particular circumstances with your independent legal and tax advisors.

Contact:
Media
Patrick O'Herlihy
patrick.o'herlihy@bmo.com
312-461-6970

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