HAVE YOU GONE THROUGH YOUR TAX PLANNING CHECKLIST?
After tax season ends, tax planning can begin.
Article published: February 03, 2025
As the dust settles on another tax season and you finalize your income tax return, it’s time to shift focus from the rearview mirror to the road ahead. Tax planning isn’t a once-a-year event; it’s a continuous effort and a proactive collaboration between you, your financial advisor and tax professionals to develop effective strategies that help ensure tax compliance.
Even if tax laws haven’t changed, your personal tax situation might look different than it used to – or vice versa. Your income, expenses or deductions could have shifted, affecting your taxable income and adjusted gross income. Changes in your life, such as a new job increasing your ordinary income, additional investment income or variations in expenses, can all have significant tax implications.
To do tax planning effectively, you should meet with your financial advisor annually. Be ready to share your 2023 tax return – it’s a map that can help guide you to new tax strategies, deductions and credits that could lead to significant tax savings.
Reviewing your tax withholding and estimated tax payments can help you manage your tax liability effectively and avoid surprises at tax time. Consider whether you are eligible for tax credits such as the child tax credit, which can directly reduce your tax liability. Evaluating your retirement contributions to tax-advantaged accounts like your retirement plan or health savings account can lower your taxable income. Additionally, strategies like tax loss harvesting can offset capital gains, reducing your net investment income tax and ordinary income for the year.
The SECURE 2.0 Act and other legislation will bring several changes to tax law that could present opportunities or have tax implications for you, especially concerning your retirement accounts and retirement contributions. See our tax planning checklist of tax considerations, and if any of them apply, think about scheduling an appointment with your advisor to review your financial situation and strategies for the current tax year.
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