5 Essential Tax Planning Topics to Consider Each Year Before Tax Day

Apr 9, 2024

April 15th is marked on calendars across the United States, signifying the deadline for filing income tax returns. However, tax planning is not merely about filling in boxes on forms to determine what you owe or what you’re owed by the government.

It’s also about strategic decision-making and proactive measures to optimize your financial situation throughout the year. Even if you have not considered overall tax planning before, now is the time to determine what you might change going forward.  

Here are five essential tax planning topics to consider well in advance of Tax Day each year: 

1. Income and Deductions

Evaluate your sources of income and potential deductions well in advance. Consider any changes in your financial circumstances, such as a new job, investment income, or significant life events like marriage or parenthood.  

Identifying deductible expenses, such as mortgage interest, charitable contributions, and medical expenses, can help minimize your tax liability. 

For example, review the article “Are HSA Contributions Tax Deductible? Answers to 11 Essential HSA Questions” for one kind of deduction you might consider.

2. Retirement Planning

Maximizing contributions to retirement accounts not only secures your future but also offers significant tax advantages. Review your retirement savings goals annually and adjust contributions as needed to take full advantage of tax-deferred growth opportunities.  

Additionally, explore the potential benefits of Roth IRA conversions or other retirement planning strategies to optimize tax efficiency. 

3. Investment Strategies

Keep a keen eye on your investment portfolio and assess tax implications associated with buying, selling, or holding assets. Consider tax-efficient investment strategies such as tax-loss harvesting, which involves selling investments at a loss to offset capital gains and reduce taxable income.  

Moreover, explore opportunities for diversification and asset allocation to minimize tax exposure while maximizing returns. 

4. Estate Planning

Estate taxes can significantly impact the wealth you pass on to future generations. Engage in comprehensive estate planning to minimize estate tax liabilities and ensure the smooth transfer of assets to your heirs.  

Review and update your estate plan regularly, considering changes in tax laws and personal circumstances, to safeguard your legacy and minimize tax burdens for your loved ones. 

5. Tax Law Changes and Compliance

Stay informed about changes in tax laws and regulations that may affect your financial situation. Educate yourself on available tax credits, deductions, and incentives to optimize your tax strategy.  

Additionally, ensure compliance with tax laws and regulations by maintaining accurate records, timely filing returns, and seeking professional guidance when necessary. 

Tax Planning Matters

By adopting a proactive approach to tax planning and addressing key tax topics throughout the year, individuals can optimize their financial well-being, minimize tax liabilities, and cultivate a brighter financial future. 

Diligent tax planning can lead to financial prosperity and peace of mind for years to come.  

To improve your tax planning, reach out to our team at [email protected] or fill out the form below.  

Adapted from: “April Showers Bring May Flowers AND Tax Day.” FMeX. 2024. 13519.pdf (fmexcontent.s3.amazonaws.com) 

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