Tax Season Is Over—Now What? Turning Last Year’s Return Into This Year’s Plan

With the April 15th tax deadline behind us, many people are ready to move on. But from a financial planning perspective, this is often one of the most valuable times of the year to pause, reflect, and plan ahead.

Your recently filed tax return is one of the most complete records of your financial life over the past year. Reviewing it helps connect the dots between the decisions you made and the outcomes they produced and can inform more intentional decisions in the year ahead.

What is Tax Planning
Tax planning refers to evaluating how financial decisions, such as income timing, investment activity and savings strategies, affect current and future tax outcomes.

A useful way to approach post-filing tax planning is to think in terms of three steps:

1. Understand what happened
2. Identify what can be adjusted
3. Monitor and revisit throughout the year

Step 1: Analyze Prior Year Outcomes
Your tax return provides a detailed snapshot of your financial activity. Some key components to review include:

• Sources of Income – How was your income structured?  For example, did it include salary, bonuses, investments, business income?  Knowing where your income came from allows you to understand how it is taxed, which may influence future decisions around compensation, withdrawals and investments.
• Tax Bracket Exposure – Were you close to a higher bracket or solidly within one? Understanding where you fall may help you determine if saving in tax-deferred or ROTH vehicles for the year ahead would be preferred.  It can also help you understand the tax savings associated with funding Health Savings Accounts and Flexible Spending Accounts and if it would be prudent to recognize more or less income in the year ahead.
• Capital Gains and Losses – Was your income higher than expected due to unanticipated capital gain distributions?  Were you subject to net investment income tax?  Do you have loss carryforwards that can be used in future years to offset realized gains?   The answers to these questions can help inform future decision making related to your investments.
• Deductions and Credits – Did you utilize available strategies, or were there missed opportunities?  For those over 65, did you benefit from the senior deduction?  If not, are there opportunities in 2026 to manage your income levels so that you can benefit from it in 2026 and 2027?
• Withholding and Estimated Payments – Ideally, you want to have paid the IRS through estimated tax payments and withholding approximately the amount of your tax liability.  If you were significantly under or overpaid, perhaps you want to adjust your withholding in the year ahead so that actual payments come out closer to what your tax liability will be.

A tax return is not just a record of what occurred; it is a reflection of how prior financial decisions translated into taxable outcomes.  Understanding prior-year outcomes provides context for evaluating current year decisions.  Without that context, planning strategies may be applied without a clear connection to actual tax results.

Step 2: Identify Current Year Planning Opportunities
Once you understand last year’s results, the next step is to look forward and determine if any changes should be made for the year ahead.

Planning considerations may include:

• Retirement contributions – Consider adjusting both the amount you contribute and the types of accounts you use to support your savings strategy.
  • For those who participate in a company sponsored retirement plan, it may be beneficial to review whether you are benefitting from a full employer match.  This may mean that you need to spread your elective deferrals across the entire year (instead of frontloading).
  • For those that are eligible for catch-up contributions (those over 50; amount is $8,000 in 2026), evaluate whether those contributions can be made on a tax-deferred basis or if they must be made on a ROTH basis (required for those with over $150,000 in W2 income in 2025).
  • For those that are age 60-63, understand that your catch-up contribution limit for 2026 is $11,250.
  • When it comes to retirement savings, the appropriate approach will depend upon your overall income level now versus what you expect it to be in retirement.
• Investment strategy – Investment decisions and tax outcomes are often evaluated separately, even though they are closely connected.
  • Be mindful of the tax implications associated with rebalancing, investment sales and gain recognition.
  • Review the holdings within each of your investment accounts and consider using asset location principles where appropriate to help manage your overall tax liability, exposures and future RMD considerations.
  • In terms of fixed income, evaluate how different options (taxable bonds vs. municipal bonds) may compare based on  your tax situation.
• Income timing – Evaluate if it would be prudent to proactively recognize income in 2026 in efforts to smooth your overall income over your retirement years to help manage your lifetime tax exposure and to manage your Medicare premiums which are determined based on your Modified Adjusted Gross Income.   In many cases, lifetime tax outcomes are influenced not only by how much income is earned, but when it is recognized.

In many cases, effective tax planning is less about identifying new strategies and more about applying existing ones in a coordinated and timely way.

Step 3: Monitor and Adjust Throughout the Year
Tax planning is not a one-time event.  As income, markets and tax rules evolve, assumptions made earlier in the year may need to be revisited.  Periodic check-ins may include:

• Reviewing year-to-date income relative to expectations
• Monitoring realized gains and losses
• Evaluating whether withholding or estimated payments remain appropriate

A mid-year or late-year review may provide additional flexibility compared to waiting until year-end.

Tax planning is often most effective when viewed as an ongoing process within a broader financial plan, rather than as a single, annual task.  While your tax return reflects what has already occurred, its broader value may lie in how it informs future decisions.  Revisiting it with intention can help provide greater clarity as financial choices evolve over time.

Tax and investment strategies involve trade-offs and may not be appropriate for every individual.  Outcomes depend on personal circumstances, market conditions and changes in tax laws.  Contribution limits and eligibility rules are subject to change and should be verified based on current IRS guidance.  Investing involves risks, including possible loss of principal.  Tax considerations should be evaluated alongside your broader financial situation.