Whew! You or your tax preparer just pressed “send” and
your tax return is off through the ether to the IRS. “I’m done with taxes for
another year,” you say to yourself. Not so fast! Tax-planning is a year-round
proposition and there is a lot you can do to be prepared for next year.
Below are nine steps to take after filing your tax
return:
Learn From Your Return-
It is smart to look beyond the amount of tax that you owed. Review your
effective tax rate (the percentage of your income paid in taxes,
calculated by dividing your tax paid by your taxable income), biggest
deductions and credits, and largest income sources.
Ask Yourself Some Questions-
Document “lessons learned” during this tax season to inform tax planning for
next year. Write down: what surprised you (e.g., blind spots that you hadn’t
considered), what was stressful, and what worked well to turn this year’s tax
filing into a feedback loop.
Make a List of Carryovers- These
are tax write-offs that you can use on future tax returns. Keep a running list
and write them down so they don’t get forgotten next year. Think capital loss
carryforwards and charitable donation carryovers.
Adjust Payroll Tax Withholding-
This also goes for quarterly estimated tax payments and withholding for
pensions and Social Security. If you owed a lot on your 2025 tax return,
received a large refund, or expect big changes to your income in 2026, tweak
your withholding now.
Review Itemized Deduction Potential-
Itemizing deductions is generally not possible without proactive tax planning
because the standard deduction is a very high hurdle to exceed. Consider
bunching charitable donations, state and local taxes, and medical expenses to
be able to itemize.
Consider Lifestyle Changes-
Life events that can change the amount of future tax owed include marriage,
divorce, widowhood, job changes, retirement, and relocation. These events
should prompt proactive planning and not big surprises.
Update Your Record-Keeping Systems-
Set up a system to organize documents related to 2026 income taxes if you had
messy records before. This includes business mileage logs and receipts and
documentation for tax write-offs (e.g., child and dependent care tax credit).
Schedule a Mid-Year Tax Check-Up-
By July or August, you will have more clarity about your expected income and
expenses than you do in February. Use this information to prepare a pro forma
(projected) tax return so you can adjust tax planning strategies before it is
too late.
Evaluate Capital Gains Exposure-
Study your 1040 Form and consider where most of your tax bill came from. If
capital gains are triggering a lot of tax, consider whether you have high
turnover investments and concentrated positions. Try to purchase tax-efficient
investments instead.
Bottom Line: A tax return provides a lens into your overall financial situation. Study it for insights that may lower your tax bill in the future. If you are working with a financial advisor, share it as an informational tool. Be proactive and don’t put taxes on the back burner until next year.
This post provides
general personal finance or consumer decision-making information and does not
address all the variables that apply to an individual’s unique situation. It does
not endorse specific products or services and should not be construed as legal
or financial advice. If professional assistance is required, the services of a
competent professional should be sought.
