Don’t File It and Forget It: Tax Planning Starts Now
May 30, 2026 • By Russell W. Hall, CFP®, CPWA®
There’s a great moment in The Peanuts Movie where Charlie Brown’s little sister, Sally, comes out from her last day of kindergarten and gleefully dumps her books in the trash, declaring that she’s so glad she’ll never have to worry about school again. Sally is then brought back down after her brother tells her it’s not true — school keeps on going, and for many years.
We feel a little bit like Charlie Brown when we talk about tax planning right after most people have just finished their returns (and are hoping to avoid thinking about taxes for another year!). But we find that it’s best to start planning now, beginning with a review of last year’s tax returns. Here are a few of the things we’re looking for on Form 1040:
Dividends — Qualified vs. Ordinary (Lines 3a and 3b)
Tax treatment on qualified dividends is more favorable, using long-term capital gains rates instead of standard rates like ordinary dividends. However, unless you own only individual stocks, this is a lot harder to control.
Tax treatment of dividends from pooled investment vehicles, such as mutual funds and exchange-traded funds (ETFs), is passed through, and shareholders don’t have control over what the fund pays out. Nevertheless, it’s good to be aware of how your dividends are being taxed and see if there’s any opportunity to do something different, like holding that investment in a more tax-efficient account.
IRA Distributions and QCDs (Lines 4a, 4b, and 4c)
For required minimum distributions (RMDs), Roth IRA conversions, or other IRA withdrawals, we’re checking to make sure everything was reported correctly. We find that IRA donations to charity (called qualified charitable distributions, or QCDs) are particularly likely to be misreported, leading to unnecessary tax payments.
There is now a dedicated QCD checkbox on Form 1040, and custodians like Schwab are switching to a better method of reporting on 1099-R forms starting in 2027, but we think there will still be some confusion for a while.
Social Security Benefits (Lines 6a, 6b, and 6c)
Up to 85% of Social Security benefits can be taxable, depending on other income, and we’re checking whether this taxability has already been maxed out. That can affect other decisions — for example, a Roth conversion would increase income and cause more Social Security to become taxable.
Recently, we’ve also been watching for clients who receive public pensions and are now eligible for Social Security benefits under the Social Security Fairness Act.
Capital Gain or Loss (Lines 7a and 7b)
We pair this step with Schedule D to examine realized gains and losses from the previous year: What impact did those make, and does anything need to be changed? We’re particularly looking for carry-forward losses, which could provide planning options for selling appreciated securities in taxable accounts. However, there could be opportunities to harvest gains as well and pay lower rates on those capital gains.
Adjusted Gross Income (Line 11a)
The AGI number and its cousin, modified AGI, affect a number of tax calculations, including taxation of Social Security and the IRMAA extra charges for Medicare. Lowering AGI is always a good goal, but at the same time, there are not a lot of options to do that.
Deductions — Standard vs. Itemized vs. Additional (Lines 12a, 13b)
For several years, most taxpayers have been filing the standard deduction, as a $10,000 cap for state and local taxes (SALT) kept them from being able to itemize. That amount has gone up to $40,000 for the next four tax years, but will drop back to $10,000 in 2030 unless the law changes again. It begins phasing out at $505,000 of income.
The additional deductions from Schedule 1-A (shown on line 13b) include the “enhanced” senior deduction, which is up to $6,000 per person for those over 65 on top of standard or itemized deductions. That calculation is again based on MAGI and starts to phase out at $75,000 for single filers and $150,000 for married couples filing jointly. The deduction is currently available through 2028.
For clients over 70 ½, it has mostly been an easy decision to shift charitable giving to IRA accounts via QCDs, especially if donations couldn’t be itemized and deducted. We may want to revisit that for some people with the higher SALT cap, but the standard deductions are still historically high (for 2026: $16,100 for singles/$32,200 for married filing jointly; if over 65, $18,150 single/$35,500 married filing jointly), so it might still be difficult to itemize.
Two other new rules will affect the charitable decision: the new charitable deduction floor and an additional cash charitable deduction for those who aren’t itemizing. The latter allows a separate deduction of up to $1,000 single or $2,000 married filing jointly for cash gift donations only.
Tax Refunded or Due (Lines 34 and 37)
Here, we’re checking whether clients had to pay too much tax or received a larger refund than expected. Either way, we may want to help adjust withholding to avoid penalties and interest, or to avoid giving the government a large interest-free loan.
We want to make it clear that we don’t prepare taxes and are not giving tax advice. But by reviewing tax returns in this way, we can help you answer questions like:
Should you withhold more taxes?
Should you sell an investment or a property?
What’s the best way to donate to charity?
How can you reduce taxable income?
If you’re interested in this type of review, please contact us. We are happy to meet with anyone for a free, no-obligation meeting. Call us at 714-738-0220 to schedule a meeting, or click here to schedule an introductory call with one of our advisors.