alternative investments
Investing Tax Policy

How Investors, Advisors, and CPAs of Alternative Investments Can Save Hours on Taxes

Own or manage a portfolio holding alternative investments? Better start thinking about tax filing.

According to the IRS, the average taxpayer spends 13 hours preparing a tax return, six of which account for recordkeeping. For the average business taxpayer, it bumps to 23 hours, 12 of which account for recordkeeping.

And when it comes to alternative investments, tax preparation is a year-round process. Unfortunately though, most financial advisors, CPAs, and investors find themselves scrambling until the last moment chasing documents to ensure taxes are filed properly. But it doesn’t have to be that way.

Here’s how investors, advisors, and CPAs of alternative investments can simplify taxes and save headache for years to come.

1. Know all investments.

There’s nothing worse than thinking you’ve completed your clients’ (or your own) taxes, only to realize you’re missing a K-1 for a forgotten private equity investment.

That’s why keeping track of all investments – including traditional investments like stocks and bonds, as well as alternatives like real estate, crypto, and private funds – is imperative when it comes to handling complex portfolios.

Aggregating all investment details ensures advisors, CPAs, and investors aren’t missing any last minute details when it comes to filing taxes.

2. Track documents throughout the year.

The time it takes CPAs to file taxes entirely depends on the complexity of the portfolio they’re dealing with. However, there’s one thing that’s certain:

CPAs will spend hours simply chasing documents needed for clients’ taxes.

And clients will spend hours trying to gather them. As we mentioned earlier, recordkeeping itself accounts for half the time it takes to prepare taxes.

Rather than repeating this same painful cycle each year, try collecting documents throughout the year. That way when tax season rolls around, everything is all ready to go. No chasing needed.

3. Automate collecting documents via tax software 

While you can complete the tips manually, it is a long, arduous process.

The good news is there is tax software that can do these things for you – no effort needed. For example, AltExchange’s Tax Center automatically collects and stores important tax documents for all alternative investments throughout the year. This occurs immediately as they come in. Documents are stored on the users’ platform, available for instant access by all parties – CPAs, advisors, and investors – at any time. The hours spent chasing and collecting tax documents for alternatives is entirely eliminated.

Using a tax software allows you to better streamline and scale your own business. Plus, relying on this software can make your own life and your clients’ lives that much easier.


The bottom line is that the more complex the portfolio you’re dealing with, the more complicated filing taxes will be. But implementing the above tips can help all parties – investors, advisors, and CPAs – stay organized, better prepare, and significantly reduce headache next tax season and for all others to come.

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