Making tax planning real

When it comes to tax planning, the numbers on paper don’t always tell the full story.

Take catch-up contributions for 401(k) plans, for example. Starting in 2026, individuals age 50+ at certain income levels will have to make these contributions to Roth accounts, not traditional pre-tax accounts. This isn’t just a rule to check off; it can impact overall retirement strategy and cash flow if plans don’t offer a Roth option.

Or consider seniors looking to maximize deductions. The enhanced senior deduction can be a real advantage, but timing matters. A Roth conversion, charitable contribution, or bonus payout can all push income above thresholds, reducing benefits if not carefully coordinated.

Charitable giving itself has limits too. Non-cash gifts, like appreciated stock, are capped at 30% of AGI, while cash contributions can reach up to 60%. Even here, the order of operations matters: understanding your income sources, timing deductions, and considering multi-year planning can make a difference.

And when it comes to investments, small adjustments can help reduce taxes; like moving to a lower-cost fund share class without triggering a taxable event. Yet, strategies like tax loss harvesting, while helpful, are not a substitute for comprehensive planning. They are a tool, not the centerpiece.

The takeaway from this? Tax planning works best when it’s applied to real situations, not just theory. Whether it’s managing income thresholds, leveraging deductions, or structuring gifts, the key is looking at the numbers in context and thinking long-term.

You can help your clients make smarter, actionable decisions this year. Explore our tax planning resources and see how strategic guidance can maximize outcomes.

Happy Tax Planning,

Steven Jarvis, CPA