SOURCE: BMO Harris Financial Advisors

March 28, 2014 08:00 ET

BMO Harris Financial Advisors Study: Eighty-Three Percent of Americans Surveyed Confident in Tax Planning, but Many Are Not Tax Efficient When They Invest

CHICAGO, IL--(Marketwired - Mar 28, 2014) -

  • Almost half of Americans do their own taxes
  • The overwhelming majority are confident that they take advantage of all tax breaks, but almost half admit they are not tax smart when investing
  • Of those expecting a refund for the 2013 tax year, more than forty percent plan to use the money to pay household bills and/or reduce their overall debt load

BMO Harris Financial Advisors (BHFA) today announced the results of a national tax study which found that almost half of those Americans surveyed (48 percent) prepare their own tax returns. Further, the overwhelming majority of respondents (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, just under half (45 percent) of the respondents admitted they are not knowledgeable about tax smart investment solutions that are 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. The study also found:

  • Just 44 percent understand how capital gains are taxed.
  • Only 47 percent of respondents understand how dividend income is treated from a tax perspective. 

"There's a sense of confidence this tax season as Americans across the country prepare their tax returns in advance of the April 15 filing deadline," said Mike Miroballi, President, BMO Harris Financial Advisors. "However, it's critical that people have an appreciation of and basic knowledge about how tax rules impact all their assets, including their investments. If you want to ensure you're getting the maximum return from your investment portfolio, you need to be aware of the range of tax-smart options that are available to you. Moreover, before you make an investing decision, take some time to understand how it could be impacted from a tax perspective before you commit."

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 work 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.

What are Americans planning to do with their tax refunds this year?

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

  • Forty-two percent will cover household bills and/or reduce their debt load (credit card balances and other debt other than mortgage).
  • Thirty-five percent will save or invest.
  • Sixteen percent will to fund vacations or purchase leisure items.
  • Thirteen percent will do renovations.
  • Just under 10 percent will donate their tax refunds to charitable causes.
  • Eight percent have decided to pay down their mortgages. 

"While everyone's financial priorities and situations are different, I'm encouraged that so many of us who are expecting a tax refund will use the money to cover basic expenses, reduce their overall debt and/or save and invest for the future," concluded Mr. Miroballi. 

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

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.

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