Three Tax Planning Strategies for a Smoother Tax Season
One of the most valuable things our wealth advisors do is help clients plan proactively for taxes. And when people first work with us, they’re often surprised to find out that real tax planning doesn’t start when your W-2’s and 1099’s arrive. Tax planning begins during the prior calendar year, sometimes even earlier.
The most effective tax planning is forward-looking. We’re looking ahead five, or even ten years, and using strategies such as Roth conversions or charitable contributions to optimize your overall financial picture. The goal isn’t just to reduce next year’s tax bill, but to position you and your heirs for the best possible tax situation.
Partnering with a wealth advisor can reduce stress during tax season, and also help you catch time-sensitive opportunities before they pass. Here are three ways to make that happen:
1. Include Your CFP® Professional in Your Tax Preparation Process
Tax preparation and tax planning are two different services, and it’s worth understanding the distinction.
CPAs focus on compliance: accurately reporting your historical transactions and filing your return. CFP® Professionals look at your long-term goals and identify strategies to optimize your tax situation over time.
At Sound Stewardship, our advisors actually look forward to reviewing clients’ draft tax returns before they’re filed. We also provide clients with a tax letter summarizing the year’s tax-related transactions, which makes the preparation process much smoother. It’s not unusual to catch a number that was entered incorrectly or a form that got missed. Catching those things before filing saves the hassle and cost of an amendment later.
Whether you use TurboTax or work with a CPA, we’re happy to take a look before you submit.
2. Run Regular Tax Projections Throughout the Year
Rather than waiting until tax season to see what you owe, regular tax projections let you understand how today’s financial decisions could affect your tax liability months or even years from now.
Our wealth advisors use advanced planning software to model different scenarios and evaluate strategies in the context of your broader financial plan. The goal is to help you answer the question: What’s the one thing we should be doing now that we’ll be really glad we did in five years?
Here’s why this matters. Say a couple in their mid-60s comes to us wanting to know if they can improve their expected tax situation over the next five years. They’re both retired, income is lower, and they’re sitting in the 12% tax bracket. But in three years, Required Minimum Distributions (RMDs) will kick in which will push them into the 22% bracket. If one spouse passes away after RMDs begin, the surviving spouse faces what’s often called the “widow’s penalty,” increasing the tax burden on a single filing status. And if both pass away with a traditional IRA, their heirs inherit a significant tax obligation, with only ten years to draw down the account under current IRS rules.
This is just one of many scenarios we work through with clients. Decisions like whether to fill up a tax bracket or execute a Roth conversion in a given year aren’t made in isolation, instead they’re made in the context of a long-term plan.
It’s also worth noting that projections are only as good as the assumptions behind them. Tax laws change (as we’ve seen with legislation like the One Big Beautiful Bill Act), and so do personal circumstances. Regular check-ins keep your projections relevant and your planning on track.
3. Pull Intentional Tax Levers for Long-Term Strategic Choices
Tax planning is most powerful when it’s built into a long-term strategy rather than treated as a once-a-year task. Decisions like whether to pursue Roth conversions, how to structure distributions, and when to do tax-loss harvesting aren’t just about meeting deadlines, they’re about making choices today that compound in your favor over time. A Roth conversion completed this year, for instance, can reduce your tax burden for decades by shifting assets into tax-free growth.
Our advisors help you think several steps ahead: identifying which strategies align with your broader financial goals, understanding the tradeoffs of each path, and sequencing decisions in a way that builds toward the future you’re envisioning. We coordinate with your tax preparer to make sure every strategy is implemented correctly, so that the choices you make now translate into meaningful and lasting impact.
A More Confident Approach to Tax Time
Tax season doesn’t have to feel like a surprise. The difference between clients who dread tax season and those who approach filing with confidence almost always comes down to one thing: proactive tax planning.
When tax planning is integrated into your overall financial strategy, not treated as a once-a-year scramble, it becomes a source of clarity rather than stress.
Schedule a Complimentary Call
If you’d like to explore how proactive tax planning could work for your situation, we’d love to talk. At Sound Stewardship, we deliver personalized financial planning grounded in timeless principles.
Schedule a complimentary 15-minute conversation with our team today.
Disclaimer: This information is for educational purposes only and is not intended as tax advice. Tax planning involves complex considerations unique to each individual’s situation. We recommend consulting with a qualified tax professional before implementing any tax strategies. Sound Stewardship does not provide tax preparation or legal services. All tax strategies should be reviewed and approved by your CPA or tax advisor.
< Back to Insights
