ASK YOURSELF THESE 5 QUESTIONS: GET THE MOST FROM YOUR TAX RETURN
From a New York attorney seeking to claim her dog as a dependent to a telecom tycoon reporting $68,000 instead of $126 million, we’re always seemingly looking to outwit the IRS.
Let’s just say some tactics are smarter than others.
Reviewing your 2025 tax return (completed in the 2026 tax year) is one of the smartest ways to reveal valuable insights about your finances, from your income and spending habits to investments and savings goals. It also enables you to get ahead of the game and make proactive financial decisions, such as adjusting withholding to maximize cash flow or converting to a Roth IRA to reduce future tax liability.
Examining your return—by yourself or with an accountant—could be your biggest return on investment.
5 QUESTIONS TO GET THE MOST FROM YOUR TAX RETURN
#1 Am I overpaying or underpaying?
Overpaying
A tax refund may feel like an unexpected prize—free money! But what it really means is you gave the U.S. government an interest-free loan. If you’re entitled to a refund, it’s likely because you overpaid your income taxes throughout the year. The IRS is simply giving back what was yours to begin with.
A large tax refund is typically anything above the average of $3,700–$3,800, with refunds over $5,000–$10,000 often considered “big.”
Underpaying
Owing a big sum is a sign to update your W‑4 and adjust your withholding. If you earn income from self-employment or investments, you may also need to start or increase estimated quarterly tax payments.
#2 Am I taking advantage of every opportunity to lower my taxable income?
Taxable income determines what you owe each year. It’s the final number the government uses to calculate your tax bill, directly determining whether you get a refund or owe money.
While gross income is the total amount you earn, taxable income is the smaller portion left over after deductions, meaning it represents the specific amount of money on which you actually pay taxes.
Now that your 2025 taxes are complete (or getting there), review your return and ask questions like:
· Am I making the most of my employer’s 401(k)?
· Am I setting aside money for healthcare or childcare through a flexible spending account?
These options matter because contributions to employer-sponsored plans are made with pre-tax dollars, which are easy, built-in opportunities to reduce your taxable income.
#3 Am I saving enough for retirement?
Review your W‑2, 1099 and retirement statements to see if you’re saving enough to meet your retirement goals.
AT THE VERY LEAST: Make sure you’re maximizing any workplace plan contributions; otherwise, you could be missing out on free employer match money.
Look at your savings as a percentage of income and compare it to your target. While 8% to 15% is a common range to replace most of your income in retirement, your ideal rate depends on your start date, retirement timeline and lifestyle goals.
If there’s a gap, your financial advisor can help you adjust your plan and get back on track.
#4 Am I overlooking savings opportunities as a self-employed individual?
Just because you work for yourself doesn’t mean you can’t maximize tax-saving opportunities. For example, you can save for retirement by creating a solo 401(k) plan, also known as an individual 401(k) or uni-401(k). The primary advantage of a solo 401(k) plan is that you are both the employer and the employee, allowing you to capture both parts of the contribution “pie.”
Other considerations:
· Healthcare deductions—100% deduction for premiums for yourself, spouse and dependents.
· Business expenses and deductions—home office, vehicle, mileage, start-up costs (up to $5,000) and Qualified Business Income (up to 20%). Qualified Business income is the net profit from a small business that you run.
· Section 179 deductions—for equipment and software
#5 Am I investing in the most tax-efficient way possible?
As you report interest, dividends and capital gains, take a moment to review your investment strategy. Frequent short-term trades could be costing you in taxes, while holding investments longer can take advantage of lower long-term rates.
Ensure you’re managing, deferring and reducing your tax liability. A financial advisor can help align your goals, timeline and risk tolerance to make sure that’s happening for you.
AT ALIA, WE CAN HELP MAXIMIZE YOUR TAX SAVINGS
Our team of wealth advisors will work through your current tax return and other related documents to assess how the next phase of life and any unexpected life changes might impact your overall financial plans. We’ll even work with your CPA and/or attorney or other professionals as needed to ensure you receive the most well-rounded advice.
While we won’t complete your taxes, our tax planning services include:
Existing policies review
Life insurance needs analysis
Long-term care insurance analysis
Disability insurance review
Medicare guidance
Homeowners, renters and P&C insurance review
Liability coverage
Get in touch with us today to begin the process.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. This information is not intended to be a substitute for specific individualized tax advice. We suggest that you discuss your specific tax issues with a qualified tax advisor.
The economic forecasts set forth in this material may not develop as predicted and there can be no guarantee that strategies promoted will be successful.
Government bonds and Treasury bills are guaranteed by the US government as to the timely payment of principal and interest and, if held to maturity, offer a fixed rate of return and fixed principal value.
There is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk.
The fast price swings in commodities will result in significant volatility in an investor’s holdings. Commodities include increased risks, such as political, economic, and currency instability, and may not be suitable for all investors.
Disclosure: Content in this material is for educational and informational purposes only and is not intended as ERISA, tax, legal or investment advice. All investments involves risk including loss of principal. No strategy assures success or protects against loss.
The content provided herein is based on our interpretation of the One Big Beautiful Bill Act and is not intended to be legal advice or provide a tax opinion. This document is a summary only and not meant to represent all provisions within the One Big Beautiful Bill Act.
This information is not intended to be a substitute for individualized legal advice. Please consult your legal advisor regarding your specific situation.
