Tax Return Filed? Help Clients Start Planning for Next Year Now

A more productive client conversation starts with a simple premise: If a client is going to pay tax, it is often better to do so when rates are favorable. That may mean accelerating income into lower-rate years rather than deferring by default. It runs counter to instinct, but at the planning level, deferral is not always the winning move.

Once you frame taxes this way, a handful of planning levers can become far more consequential in the advisory process.

Where Advisors Can Lead

In practice, advisors can actively manage the following planning levers to shape timing, sequencing, and structure to help improve outcomes.

1. Contribution and Withdrawal Strategies

Client income rarely arrives in a straight line. It can vary significantly from year to year, driven by bonuses, equity compensation, business performance, retirement timing, or liquidity events. Those swings create planning opportunities — but only if they are anticipated and managed.

Advisors can help:

• Map expected income over the next three to five years to help identify likely “low‑rate” and “high‑rate” windows;
• Coordinate Roth conversions, capital gains realizations, and strategic withdrawals into lower‑rate years; and
• Use higher‑income years more intentionally — pairing them with deductions, charitable strategies, or large one‑time gifts.

Retirement accounts should be positioned as tax tools, not just investment wrappers. The same is true for charitable giving. Whether clients actually receive a meaningful benefit depends on how much they give, when they give, whether they itemize, and what assets they donate (cash vs. appreciated securities vs. qualified distributions from certain accounts).

2. Phaseouts, Thresholds, and “Stealth Taxes”

Increasingly, tax planning extends beyond marginal brackets. Advisors should help clients monitor:

• Phaseouts and eligibility thresholds tied to benefits such as the child tax credit, enhanced senior deductions, and the expanded State and Local Tax (SALT) cap; and
• Stealth taxes and add-on costs that activate as income rises, even when the marginal bracket does not change, including the net investment income tax and higher Medicare premiums.

In many cases, your goal is not simply arriving at “lower income” but managing where income lands. That way, clients can potentially avoid thresholds that quietly increase their total tax bill.

A Framework Advisors Can Use With Each Return

Tax opportunities arise and expire every year. Those that go unused are often gone for good. A client’s freshly filed return is the right place to start. It shows what drove the outcome and where you may have room to maneuver going forward.

In client review meetings, the return can serve as a practical framework for identifying planning opportunities across a few key areas.

Income

Use the return to educate clients on what they earned and how it was taxed. Break income into its core components:

• Ordinary income;
• Capital gains; and
• Qualified dividends.

Then, as the advisor:

• Review where each type of income landed across marginal brackets;
• Identify unused lower brackets that could be filled intentionally; and
• Evaluate whether accelerating income, taking withdrawals, or doing Roth conversions could make sense in a low‑rate year.

Key Thresholds and Phaseouts

Review whether the client’s income places them near key eligibility thresholds, including:

• American Opportunity Tax Credit;
• Child tax credit;
• Enhanced senior deduction; and
• SALT cap deduction.

Shifting Income Within the Household

When appropriate — and in coordination with the client’s CPA — shifting income can reduce the household’s overall tax burden. Advisors can help evaluate:

• Hiring children within a family business (when properly structured and documented);
• Family limited partnerships; and
• Trusts holding income-producing assets.

Tax-Advantaged Accounts

Review whether the client’s mix of accounts aligns with their current goals and future tax profile. Key areas include:

• Pretax vs. Roth vs. a blended approach — including the often-overlooked after-tax contribution opportunity for efficient in-plan Roth conversions;
• 529 plans for education savings;
• Health savings accounts (triple tax-advantaged when eligible); and
• Roth IRA funding for children with earned income (if eligible).

Income Efficiency

You can often improve after‑tax outcomes without overhauling the investment strategy. Advisors can help clients:

• Be intentional about asset location — determining which holdings belong in taxable, tax‑deferred, or Roth accounts;
• Harvest losses when available to offset current or future gains; and
• Harvest gains deliberately when they can be taxed at 0% for eligible clients.

Charitable Planning

For charitably inclined clients, thoughtful structuring can significantly improve tax efficiency. Advisors can help:

• Compare donating appreciated securities vs. cash;
• Track and fully utilize carryforward deductions; and
• Evaluate donor‑advised funds and split‑interest vehicles (like charitable remainder or charitable lead trusts) to pull deductions into higher‑income years.

Estate Planning

This is often where multiyear tax planning becomes generational planning. In coordination with clients and their estate attorney, advisors can:

• Review annual gifting strategies;
• Evaluate trust structures to protect assets and control access;
• Consider using some or all of the lifetime exemption to shift future appreciation out of taxable estates; and
• Review state‑specific look‑back rules for gifts to non‑charitable beneficiaries.

Business Structure

For business-owner clients, entity choice and compensation strategy can drive meaningful tax differences. Advisors can coordinate with tax and legal counsel to review:

• Whether an LLC, partnership, S-corporation, or C-corporation best aligns with a client’s goals and potential exit plans; and
• Opportunities related to pass‑through entity tax regimes and the qualified business income deduction.

Turning Returns Into Ongoing Planning

Working through these categories with a client’s return in hand should surface questions. Those questions are the starting point for deeper planning. Encourage clients to view filing as the beginning of the cycle, not the end. Position yourself as the professional who helps design outcomes across years, working alongside a CPA who executes the return within a shared strategy.

Filing is not the finish line. For advisors, it is the starting point for proactively managing — and ultimately helping reduce — the taxes clients pay over time.

Matt Doran, leader of Advanced Planning at wealth management firm &Partners, brings over 20 years of experience as a CFP professional to support advisors and clients with sophisticated financial and tax strategies. His experience includes holistic planning roles at Sage Wealth Planning and Edward Jones. Matt holds a master’s in taxation and an estate planning certificate from Villanova University.

---

A message from Advisor Perspectives and VettaFi: Discover something new! Click here to register for our upcoming webcasts.

More Liquidity Topics >