The Challenge: An Unexplained Tax Liability

A new client came to us from a previous advisor who provided both investment management and tax preparation services. One of the first steps in our onboarding process is reviewing past tax returns to gain insight into a client’s financial picture. In this case, we immediately noticed something unusual—an unreasonably high total tax liability of nearly $60,000 on their most recent return. Given the client’s income and deductions, this number seemed excessive.

How We Helped: Identifying the Mistake and Taking Action

To determine the source of the discrepancy, we performed a deep dive into the client’s tax return, cross-referencing income sources, deductions, and credits. Here’s what we found:

A Double Taxation Error – Upon further analysis, we discovered that the previous advisor had mistakenly added tax liabilities from two parallel tax calculation systems: the regular tax system and the Alternative Minimum Tax (AMT). Instead of reporting the correct tax due, which would be the greater of the two calculations, the advisor had effectively doubled the client’s tax bill by adding them both together.
Consultation with Tax Experts – To confirm our findings, we consulted with our tax software vendor, who verified that this was indeed a filing error.
Connecting the Client to a Competent Tax Advisor – Once we identified the issue, we referred the client to a qualified tax professional who could file an amended return to correct the mistake.
Securing a Significant Refund – As a result of the corrected filing, the client received nearly $30,000 back from the IRS—money that they should never have paid in the first place.

The Outcome: A More Reliable Tax Strategy Moving Forward

This experience reinforced a critical lesson: tax filing mistakes happen, even when working with so-called “experts.” By proactively reviewing past tax returns, we were able to:

Identify and correct a costly error
Help the client secure a significant refund
Connect the client with a more reliable tax professional
Build a system to ensure better accuracy and oversight in future tax filings

For this client, what began as an overwhelming frustration turned into a financial win. And for us, it reaffirmed the importance of double-checking tax filings—even when they come from a professional.

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