By Robert E. Quittner, Jr. CFP® & CMFC™
Investment Advisor Representative
[email protected]
Back in April, I wrote about the difference between tax preparation and tax planning.
Tax preparation looks backward while Tax planning looks forward.
According to estimates from the Tax Foundation, nearly 86% of taxpayers are expected to claim the standard deduction on their 2026 tax return, while approximately 14% are expected to itemize.
For the 86% taking the standard deduction, there may be fewer opportunities to reduce taxes through traditional itemized deductions. That makes managing taxable income even more important. In other words, tax planning is increasingly about not only what you can deduct, but also when and how you recognize income.
As we enter the final few months of 2026, that distinction becomes especially important because there is still time to make decisions that can affect your 2026 tax return. Once December 31st passes, many of those opportunities are gone.
Here are a few areas worth reviewing.
Retirement plan and HSA contributions. If you’re still working, increasing contributions to a 401(k), 403(b), or other pre-tax retirement plan may reduce your taxable income. If you’re eligible for an HSA, additional contributions can also provide a valuable tax deduction while setting aside money for future healthcare expenses.
Tax Loss Harvesting. A good year in the stock market can create an unexpected tax bill if you have realized capital gains. This is a good time to review taxable investment accounts for losses that could potentially offset some of those gains. On the other hand, someone in a lower tax bracket may have an opportunity to intentionally realize gains at a favorable capital-gains rate.
IRA distributions and RMDs. If you’re taking distributions from an IRA, we want to know how much taxable income you’ve already received and whether additional withdrawals are necessary. For those subject to Required Minimum Distributions, it’s also important to make sure the required amount is withdrawn before year-end.
Non-Qualified Withdraws. If you’re taking regular withdrawals to supplement your income, it may be worth reviewing which accounts those withdrawals are coming from. In some situations, shifting withdrawals from tax-deferred retirement accounts to non-qualified accounts can reduce taxable income. The right source of income can depend on your tax bracket, capital gains, Medicare premiums, and longer-term retirement strategy.
Charitable giving and QCDs. If you’re over age 70½ and planning to give to charity, a Qualified Charitable Distribution (QCD) from your IRA may be more tax-efficient than writing a check. A QCD can satisfy all or part of an RMD while keeping that distribution out of your adjusted gross income.
Roth Conversions. A Roth conversion doesn’t lower this year’s taxable income, it increases it. But if you have room remaining in a favorable tax bracket, intentionally recognizing additional income today may reduce future taxes and RMDs. The important question is not simply whether to convert, but how much to convert.
Why does all of this matter?
Because taxable income can affect much more than your federal income tax bracket. It can influence the taxation of Social Security benefits, Medicare IRMAA premiums, capital gains taxes, and other income-related provisions.
That’s why year-end tax planning isn’t simply about finding deductions. It’s about controlling your taxable income whenever possible.
By estimating your 2026 income now, we still have time to identify opportunities, make adjustments, and avoid discovering next April that there was something we could have done had we reviewed your situation a few months earlier.
Hopefully we see a different Birds team on the field this week!
Enjoy your weekend!
Rob