6 Reasons Why You Should Share Your Tax Return with Your CFP

As “Tax Day” 2025 is now in the rearview mirror, planning for next year’s return starts now. That’s because proactive tax planning is an important part of the financial planning process. While there are some strategies to reduce tax liability up to the filing deadline, many tax planning strategies need to be implemented throughout the year, or at the very least, by December 31st of each year.  

While you may be happy to ignore tax planning for another 9-10 months, here are six reasons why we suggest sharing your 2024 tax return with us, so we can review if there are tax strategies you should consider implementing now, before time ultimately runs out.  

• Roth Conversions
  • We can analyze your tax return to determine if converting traditional IRA or 401(k) funds to a Roth IRA makes sense. This involves paying taxes now on the converted amount to enjoy tax-free withdrawals later. By reviewing your income and tax bracket, we can strategize the optimal amount to convert, potentially reducing future tax burdens, especially if you expect to be in a higher tax bracket in the future. 

• Tax Loss Harvesting
  • If you have a non-retirement investment account, sharing your tax return helps us identify opportunities to sell investments at a loss to offset capital gains or up to $3,000 of ordinary income annually. This strategy can help lower your tax liability. We can plan these sales throughout the year, aligning with market conditions and your investment goals. 

• Saving in Health Savings Account
  • If you’re eligible for an HSA (typically with a high-deductible health plan), we can review your tax return to confirm contributions and suggest maximizing them. HSA contributions are tax-deductible, grow tax-free, and can be withdrawn tax-free for qualified medical expenses – the incredibly rare triple-tax advantaged account. This reduces taxable income and builds a healthcare savings cushion. 

• Changing withholdings on pensions/Social Security
  • Your tax return reveals if you’re over- or under-withholding taxes on your pension or Social Security income. We can recommend adjustments to avoid large tax bills or overpaying taxes throughout the year, optimizing cash flow for other financial goals.
  • Note: You must complete a separate IRS withholding form or call SSA directly to make your tax withholding choice if electing your Social Security Benefits through the online portal.
    • Download Form W-4V: Voluntary Withholding Request 

• Deferring more income into company provided retirement plan
  • By reviewing your income and deductions, we can provide feedback on potentially increasing your pre-tax contributions to employer-sponsored plans like a 401(k) or 403(b). These contributions reduce taxable income and grow tax-deferred, potentially lowering your current tax liability while boosting retirement savings. 

• Reviewing cost basis/depreciation on rental property
  • If you own rental properties, your tax return provides details on depreciation and cost basis. While claiming depreciation helps reduce your tax liability in the short-term, it could also lead to a larger tax bill if/wen you eventually sell the property. Based on your specific situation, we can help assess whether adjustments could be made to optimize tax deductions now or minimize capital gains taxes upon selling the property.