If You Could Afford a Financial Planner, Here’s What They’d Tell You To Do Before Filing Your Taxes
Money doesn’t grow on trees, and personalized advice from financial planners can’t be found out in the wild, either. Unfortunately, you can’t hear advice about filing your taxes whispered on the wind — you’ll need to pay for those insights. And if you don’t have that money, you might assume you’re on your own.
But maybe not.
MoneyLion always has your back, so we talked to Brennan Kolar, founder of Atlas CPA Index, about what he thinks financial planners would tell clients to do before filing their taxes. Even if you can’t afford to sit down with a planner before clicking “send” on your taxes, you can still borrow the moves.
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1. Please, Look at Last Year’s Tax Return
If you were fortunate enough to work with a financial planner, they’d likely want to meet with you before tax season — around October or November — and pull out a copy of last year’s return. Kolar says they’d compare it with the current year’s income trajectory.
What are they looking for first? Adjusted gross income, or AGI, since it can determine your eligibility for many deductions and credits.
“Most people wouldn't look at their tax return again until the following January, when their W-2 arrives, and by then it’s too late to make adjustments that could have lowered their bill,” Kolar said. “A planner is looking three to four months ahead of the filing deadline, which most consumers never do.”
So please, hold on to last year’s tax return and be prepared to review it carefully — ideally before the holidays.
2. Context Matters When It Comes to Taxes
One of the most significant perks of working with a financial planner is that they have a full, connected view of your finances. While tax software asks questions and applies your answers to a form, it doesn’t understand how different financial events interact over the course of a year — and that context can have real tax consequences.
“[Tax software] doesn’t know that you sold stock in March, converted part of a traditional IRA in July, and started a side business in September, and that the combination of those three events pushed you into the next capital gains bracket,” he explains.
Your trusted financial planner would likely advise you to strategically realize gains up to a certain threshold before Dec. 31. Software, however, won’t flag that opportunity unless you already know what to look for.
3. Year-End Tax Projections Are Important
Kolar says that one thing financial planners typically do for their high-net-worth clients actually applies to everyone: a year-end tax projection.
“They estimate total income for the year, subtract the standard deduction and compare the result with the tax bracket thresholds,” he said. “If you’re close to a bracket boundary, even a small 401(k) contribution increase or charitable donation can keep you in the lower bracket.”
This kind of projection helps you make smaller, smarter moves while there’s still time to act. Even if you can’t afford a planner, Kolar says you can do a simplified version on your own with a calculator and your November pay stub. We’d also suggest a strong cup of coffee.
4. Revisit Your Retirement Contributions
Like most people, you likely adopt a “set it and forget it” approach to your 401(k) contributions, choosing a percentage during onboarding and rarely revisiting it. A financial planner, however, reviews that choice every year. As your income changes, your tax bracket can shift — and contribution limits may change as well.
“A planner looks at whether a traditional or Roth contribution makes more sense based on your current bracket versus where you’ll likely end up in retirement,” Kolar said.
For instance, if you’re in the 22% bracket now but expect to land in the 12% bracket later, traditional contributions may save you more over time. On the other hand, if you’re early in your career and currently in the 12% bracket, “Roth is usually the better move because you’re paying tax at your lowest rate,” he added.
That insight only works if you’re willing to take a second look and make changes before the year ends.
5. Think About Where You Put Your Investments
Working with a financial planner, you’ll get really familiar with talking about where your investments live — not just what you invest in.
"The idea is simple: Put tax-inefficient investments, like bonds, REITs and actively traded funds that generate short-term gains, inside tax-advantaged accounts like your IRA or 401(k)," Kolar said. "Put tax-efficient investments (index funds, long-term holdings) in your taxable investment account."
Kolar says that this approach, known as asset location, can significantly reduce the taxes you pay on dividends and realized gains over time.
“It isn’t complicated; it just takes time — which is something most people don’t have when it comes to taxes,” he said.
The Bottom Line
In an ideal world, everyone would have access to a financial planner they trust. Until then, borrowing their playbook can go a long way. Review last year’s return, understand how your financial moves work together and make small adjustments before filing, and you can approach tax season with confidence — and potentially keep more of your money.
This article was provided by MoneyLion.com for informational purposes only and should not be construed as financial, legal, or tax advice.
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