Most people breathe a sigh of relief when April 15 passes (we sure did!). The returns are filed, the refund is on its way (or the check is in the mail), and taxes get pushed to the back of the mind for another year. But here’s the truth that most people miss: the day after you file is actually the best time to start planning for next year.

Why? Because right now you have something extremely valuable: a full picture of last year’s tax return and nearly 8 1/2 months of runway to plan around it. Tax planning isn’t a once-a-year scramble; it’s a year-round strategy. And the people who intentionally build wealth know that the decisions made between May and December can be far more impactful than those made in a rush before the filing deadline. 

In fact, our upcoming meetings with clients are all about proactive tax planning. If you want in on this type of proactive planning with your financial advisor, schedule a consultation with us today.

Step 1: Project Your Income for the Year

Everything in tax planning flows from one starting point: how much money do you expect to make this year? This isn’t just your salary. A complete income picture includes:

• W-2 wages, including any bonuses or raises you’re anticipating
• Self-employment or freelance income (use your prior quarters as a baseline, and adjust if business is trending up or down)
• Investment income such as dividends, interest, and any realized capital gains
• Rental income if you own investment property
• One-time events like stock option exercises, an inheritance, a business sale, or a property sale

When in doubt, estimate on the higher end for income, as this will impact your tax obligations. More on that next.

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Step 2: Review Your Tax Withholding

Most people set their W-4 when they start their job and never look at it again. That’s a mistake. If your life has changed, you got married, had a child, took on a side business, or got a significant raise, your withholding may be completely out of sync with what you actually owe. We find this to be true with most of our client households making over +$350k.

Pull out a recent pay stub and look at how much has been withheld so far this year. Then ask yourself:

• Did I owe a large amount last April? That’s a sign you’re under-withheld and need to increase withholding or make estimated payments.
• Did I get a very large refund? That’s money you gave the government as an interest-free loan. You might consider reducing withholding and putting that cash to work during the year.
• Has my income or filing situation changed significantly? Update your W-4 with your employer.

If you have self-employment income, rental income, or other sources not subject to payroll withholding, you’re likely responsible for making quarterly estimated tax payments. Those are due in April, June, September, and January. Missing them can trigger penalties, so build this into your calendar now.

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Step 3: Map Out Your Deductions

Knowing your deductions early in the year gives you the power to make smarter decisions about spending, saving, and giving. Start by figuring out whether you’re likely to itemize or take the standard deduction.

For 2026, the standard deduction is $16,100 for single filers and $32,200 for married filing jointly. If your itemized deductions won’t exceed those thresholds, you’re taking the standard deduction. In 2025, we saw a lot of our clients move from the standard deduction to itemizing with the changes in tax laws last summer and the increase in the SALT deduction. Regardless, pay attention to your deductions!

Common deductions worth tracking throughout the year:

• Payroll Deductions:
  
  • Pre-tax retirement contributions (401(k), IRA, SEP-IRA); are you on track to maximize them?
  • Health Savings Account (HSA) contributions if you’re on a high-deductible health plan (remember, the maximum limit is $8,750 for a family, which includes both employer and employee contributions)
  • Health insurance premiums
• Itemized Deductions on your Schedule A
  
  • Mortgage interest and property taxes (subject to the new $40,000 SALT cap)
  • Medical expenses
  • Charitable contributions, both cash and non-cash donations like clothing or household goods

Keeping organized records now saves significant stress later. Create a household filing system that is shared between you and your partner, where you can upload tax documents and charitable donation receipts throughout the year. 

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Step 4: Run the Numbers in a Tax Planning Tool

This is where projections become actionable. Tax filing software tells you what happened last year. Tax planning software, and a good advisor, show you what’s likely to happen this year and lets you model different scenarios before they occur.

Feed in your projected income, current withholdings, expected deductions, filing status, and any anticipated life changes. The output you’re looking for:

• Estimated tax owed or refund for the year
• Your effective tax rate (what you’re actually paying as a percentage of income)
• Your marginal tax bracket (what the next dollar of income will be taxed at, which drives a lot of planning decisions)

Once you have this picture, you can start asking the right questions, which brings us to the most important step.

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Step 5: Turn the Output Into a Strategy

Your projected tax picture isn’t just a number; it’s a decision-making tool! Here are the most impactful moves to consider once you know where you stand:

Roth Conversions

If your income is lower this year than you expect it to be in retirement, or if you’re in a lower bracket than usual, converting some pre-tax retirement savings (traditional IRA or 401(k)) to a Roth account may make sense. You pay tax now at a lower rate so you don’t have to pay it later at a higher one. The key is knowing how much you can convert without pushing yourself into the next bracket. That’s where we come in!

Real client examples of where we’ve conducted Roth Conversions: dual income household drops to a one-income household, large casualty loss deduction on the tax return, large business loss on tax return, large charitable contribution, and early retirement.
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Roth vs. Pre-Tax Contributions

Every year, you should evaluate whether your ongoing retirement contributions are better made pre-tax (traditional) or after-tax (Roth). If you’re in a high bracket now and expect to be in a lower one in retirement, pre-tax contributions make more sense. If the reverse is true, or if tax rates are expected to rise, Roth contributions may be the smarter play. Your projected tax picture, plus thoughtful estimates on future tax rates, are whats needed to make this call. 

Don’t forget about your spouse here. There have been so many times where I see one partner do all pre-tax and the other do a mix of pre-tax and Roth without any intention or strategy behind the decision. Partner with a financial planning firm like us to help navigate this for you and your spouse!
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Charitable Giving Strategy

If you’re charitably inclined, how you give matters as much as how much you give. A few strategies worth exploring:

• Bunching donations: Instead of giving a little each year, consider consolidating two or three years’ worth of donations into one year to push past the standard deduction threshold and itemize.
• Donor-Advised Funds (DAFs): Contribute a lump sum now (and get the deduction now), then distribute to charities over time at your own pace.
• Qualified Charitable Distributions (QCDs): If you’re over 70½ and have an IRA, you can donate directly from it and satisfy your Required Minimum Distribution without the income hitting your tax return.
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 Tax-Loss Harvesting

If you have taxable investment accounts, mid-year is a good time to review for unrealized losses. Selling positions that are down can offset capital gains elsewhere in your portfolio, which can reduce your tax bill without meaningfully changing your investment strategy (just be aware of wash-sale rules). 

Build the Habit of Year-Round Tax Awareness

The best tax outcomes aren’t built in April. They’re built over the course of a full year, through a series of deliberate, informed decisions made when there’s still time to act on them.

A simple cadence to adopt: 

Q1 - Complete your tax return
Q2 - View your tax return and conduct projections
Q3 - Implement strategies and adjustments
Q4 - Review where things actually landed and make any final adjustments before year-end.

That’s how we operate. 

If this is the type of proactive tax planning you’ve been searching for, email us today at hello@fyoozfinancial.com. 

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Fyooz Financial Planning is a fee-only, fiduciary financial planner based in Minneapolis, MN and Portland, OR, dedicated to helping couples achieve their financial goals. Whether you're planning for retirement, managing investments, or looking for tax-efficient strategies, our experienced team provides personalized guidance.

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Disclaimer: This article is for informational purposes only and is not a recommendation of Fyooz Financial Planning, Natalie Slagle CFP®, or Daniel Slagle CFP®. Past performance may not be indicative of future results and may have been impacted by events and economic conditions that will not prevail in the future. Therefore, it should not be assumed that future performance of any specific security, investment product or investment strategy referenced in the article, either directly or indirectly, will be profitable or equal to the corresponding indicated performance level(s). No portion of the article shall be construed as a solicitation to buy or sell any specific security or investment product or to engage in any particular investment or financial planning strategy. Any reference to a market index is included for illustrative purposes only, as it is not possible to directly invest in an index. Indices are unmanaged, hypothetical vehicles that serve as market indicators and do not account for the deduction of management fees or transaction costs generally associated with investable products, which otherwise have the effect of reducing the performance of an actual investment portfolio.

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