By Robert E. Quittner, Jr. CFP® & CMFC™
Investment Advisor Representative
[email protected]
It’s the one day of the year that everybody would like to wipe off their calendar except for the accounting firms—the dreaded April 15th tax filing deadline!!
We hosted two lunch and learn events last August which covered the basics of the OBBBA as it applied to individuals. The OBBBA made a lot of headlines last July after it was enacted, but your 2025 tax return tells the real story as to how these changes actually affected your personal situation. Now that you have navigated through the first year of changes, we are following up with many clients to see how they actually fared. It’s important to us for many reasons, but the big one is for withholding purposes.
In any given month for us, there are hundreds of distributions from clients’ IRAs into their checking accounts for monthly bills. Federal taxes are normally withheld, and we want to ensure that we withhold a reasonable percentage. It’s also a good time to evaluate your withholdings on your other income streams, such as Social Security or a pension.
In years prior to the Tax Cuts and Jobs Act of 2017 (TCJA), and more recently the OBBBA, there were more opportunities to adjust your tax outcome after the fact through credits, deductions, or timing strategies. According to the Bipartisan Policy Center, “over 90% of taxpayers were expected to claim the standard deduction in 2026 instead of itemizing their deductions. For middle-income households, the expanded standard deduction under the OBBBA makes it the most advantageous option, effectively eliminating the need to itemize.”
Due to these changes, your tax picture is more “fixed” than ever before. There is significantly less room to make last-minute adjustments, leading to more reliance on taxable income as the primary driver of taxes. In other words, taxes are becoming more about your taxable income and less about what you can deduct.
With that being said, let’s cover the difference between tax preparation and tax planning.
Tax preparation is looking backward. This is the process of filing your tax return. It’s about reporting what’s already happened last year:
- You gather your W-2s and 1099s
- You or your accountant then calculate what you owe or the amount of your refund
- Then you file the forms
Tax preparation is about telling the IRS your story after the year is already over.
Tax planning, conversely, focuses on looking forward. This is about making decisions before the year ends to reduce current and future taxable income and therefore lower your tax outlay over your lifetime:
- Deciding when and where to take income from
- Creating a tax diversification plan so you have the freedom and control over which accounts to withdraw from
- Reducing your required minimum distributions (RMDs)
- Avoiding income-related monthly adjustment amount (IRMAA) penalties
- Using strategies like Roth conversions, charitable giving, donor-advised funds (DAFs), qualified charitable distributions (QCDs), and the timing of capital gains (or losses), etc.
Tax planning is about shaping your story going forward so you pay less in taxes in the future.
Lowering your taxes isn’t about one big move; rather, it’s focused on a series of smart decisions you execute throughout this year and future years. The earlier you start planning, the more control you have over your taxable income and, ultimately, your tax outlay over your lifetime.
Good tax outcomes aren’t created in April—they’re built throughout the year.
Relax and enjoy your weekend!!
Rob