Actionable Steps for Taxes

 In Tax Planning

Tax Season Wrap-Up: Act Now to be Prepared for 2019

You’ve filed your taxes, or at least paid what you owe, but take a few extra steps to wrap up this tax season. Review this list for actionable steps to take to improve your tax circumstances and be prepared for next year!

  • Share your 2018 return with your financial planner. Cooperative communication between tax professional and financial planner is an important communication link to assist with proactive financial advice. Make sure that you share your tax return so that your current or recent circumstances are factored in to financial analysis.
  • Review your withholdings. Properly managing the money you hold back as withholdings, whether from employment income or retirement distributions, can help to effectively prepare for future tax bills. On the other hand, if you are receiving big refunds or your income is now much lower, it may be appropriate to cut back on withholdings. Since the tax law recently changed, review of money held back is even more relevant today than in past years.
  • Bump up retirement savings. One of the most effective ways to reduce tax liabilities can also increase your future well-being. Retirement savings in qualified plans such as 401(k)s and IRA’s often reduces your tax bill. Also, evaluate whether a Roth option makes sense. For some, it might, but for others, the traditional contribution route might be more effective due to current tax circumstances.
  • Start paying tax estimates. If you owed for your taxes that you recently filed, it’s likely you’ll need to evaluate the need to pay tax estimates. This can avoid a penalty for future filings as well as spread out your tax liability over time. Mark your calendar for your estimated payments in June, September and January, in addition to the first payment due April 15. If you have trouble remembering, work with your tax professional to determine if automated payments are right for you.
  • Adjust your charitable gifts for the new tax law. If you itemized in the past, but now find yourself using the standard deduction, you may want to review the methods you use for charitable contributions. Some may find it useful to bundle several years of gifts in one year so that you can periodically qualify for an itemized deduction. For those over 70.5 years old who take required minimum distributions from your retirement account, investigate whether a qualified charitable distribution might be appropriate.
  • Review the tax efficiency of your investments. Some investments carry more tax costs than others. The same goes for certain investment strategies. If you have an investment portfolio with unexpectedly or persistently high tax cost, review to ensure that the strategy is effective in terms of its after-tax return. Should you invest in municipal bonds? Is a high turnover rate reducing your bottom-line results? Are there opportunities for periodic tax-loss selling to offset gains? Make sure you understand the answers to these questions as you evaluate your investments’ tax situation.
  • Accelerate taxes in temporary low tax bracket years. This tip is especially important for consideration if you’re an early retiree. While a low tax year seems like a dream, if your taxes over time are likely to be quite high, you may want to “fill up” the lower tax bracket through retirement distributions or Roth conversions. This strategy is not always a slam dunk but is worth considering if your tax bracket will be changing significantly over time.

Taxes can be are complicated, frustrating, and time-consuming. By effectively preparing for the future year now, the possibilities for an effective strategy increase. Make sure to communicate with your tax professional and look for opportunities to coordinate with your financial planner. Want to continue the conversation? Schedule a meeting with Melissa Joy, CFP® at Pearl Planning.


While we are familiar with the tax provisions of the issues presented herein, as Financial Advisors of RJFS, we are not qualified to render advice on tax or legal matters. You should discuss tax or legal matters with the appropriate professional.