Four Ways to Use Your Tax Return as a Financial Planning Tool
Rather than filing away your paperwork and forgetting about it, this CPA recommends using it as a source of insight to optimize your long-term financial strategy.


Now that most of us have filed our tax returns, it can be very tempting to move on. But that return is more than a historical document — it’s a detailed snapshot of your financial life, and when reviewed thoughtfully, it can act as a powerful planning tool.
However, the majority of Americans miss this opportunity. According to a study by the American Institute of CPAs, only 27% of individuals use their tax return to inform or adjust their financial plan each year.
This article is written by CPA Jennifer T. Stephenson, who is also the chief planning officer at SignatureFD, where she is involved in all levels of servicing clients’ financial planning needs.

Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
That means nearly three-quarters of taxpayers overlook a uniquely comprehensive source of insight that could help optimize their long-term financial strategy.
With the right lens, your 2024 tax return can reveal where your investment strategy may be generating unnecessary tax exposure, opportunities to better manage cash flow and the potential to fine-tune your charitable and savings strategies.
Here are a few key areas to consider:
1. Assess investment tax efficiency
Your tax return can offer a wealth of insight into how your investments are impacting your overall tax liability.
- Capital gains and losses. If you sold investments during the year, your return will reflect realized gains or losses. This information is essential when considering strategies such as tax-loss harvesting, which can help offset future gains, or when thinking about rebalancing out of highly concentrated positions.
- Interest and dividend income. Form 1040 and Schedule B (Interest and Ordinary Dividends) detail the income generated by your accounts. If your taxable accounts are generating high levels of non-qualified dividends or interest, it may be worthwhile to revisit how your assets are allocated across taxable and tax-advantaged accounts.
- Maximize tax-advantaged account contributions. If you’re not yet maxing out your contributions to a 401(k), health savings account (HSA) or individual retirement account (IRA) on an annual basis, your return can help identify room for increased savings. In some cases, a Roth IRA or Roth 401(k) may be appropriate, particularly for those in lower tax brackets or earlier in their careers.
- Review asset location strategy. Your return can also help clarify whether the right assets are held in the right types of accounts. Income-generating assets, for instance, are often best placed in tax-deferred or tax-exempt vehicles, while tax-efficient investments can typically be held in taxable accounts to help minimize your overall tax burden.
2. Optimize giving and medical expense strategies
Your deductions also serve as an opportunity to be more strategic with charitable giving and health care planning.
- Charitable contribution planning. If you typically give to charitable organizations but do not itemize deductions, you may benefit from bunching multiple years of contributions into a single tax year. Donor-advised funds (DAFs) and gifts of appreciated securities can further enhance both tax efficiency and philanthropic impact.
- Medical expense timing. If your qualified medical expenses approach the deductibility threshold — 7.5% of adjusted gross income — consider consolidating planned procedures or care costs into a single tax year to maximize their potential deductibility.
3. Refine cash flow and withholding management
Beyond deductions and investment income, your tax return offers valuable insights into your cash flow management. Understanding your options is especially important in times of economic uncertainty.
- Evaluate withholding and estimated payments. An unexpected balance due or an overly large refund may indicate that your withholding or estimated tax payments are out of sync with your actual income. Adjusting now can help avoid surprises — and penalties — when you file your 2025 return.
- Reinvest surplus income strategically. If you’re receiving dividend or interest income that you do not rely on for living expenses, reinvesting that income can help build wealth over time. This approach supports dollar-cost averaging, a strategy that can reduce the impact of market volatility while building your portfolio for the long term.
4. Begin planning for next year now
Your recent tax return offers a clear view of where you were financially in 2024. Leveraging it thoughtfully allows you to chart a more intentional course forward.
For example, if you’re able, consider frontloading contributions to accounts like IRAs or 529 plans early in the year. This allows your investments more time to grow and helps you take full advantage of tax benefits.
Looking for expert tips to grow and preserve your wealth? Sign up for Building Wealth, our free, twice-weekly newsletter.
You can use this moment to meet with your financial planner. Together, you can work to ensure your investment and tax strategies are working in harmony — and that your financial plan is evolving alongside your life and your goals.
We believe tax planning should never be a once-a-year exercise. When integrated into your broader financial strategy, it can become an engine for long-term growth and greater peace of mind.
Related Content
- 10 Ways to Refine Your Financial Plan for a More Secure Future
- Financial Planning: The Best Defense Against Financial Fear
- Five Financial Tips to Help You Plan for the Unexpected
- How to Invest Your Tax Refund
Get Kiplinger Today newsletter — free
Profit and prosper with the best of Kiplinger's advice on investing, taxes, retirement, personal finance and much more. Delivered daily. Enter your email in the box and click Sign Me Up.

As the chief planning officer, Jennifer works with the planning, insurance and generosity teams to deliver support to advisers and a personalized experience to SignatureFD clients. She is involved in all levels of servicing clients’ financial planning needs, including developing and implementing comprehensive wealth management programs in cash flow, retirement planning, risk management and insurance, tax planning and education funding in an integrated way. She aims to ensure each client has a consistent and holistic experience by integrating the firm’s various disciplines into financial planning. She seeks to help clients achieve their Net Worthwhile® by coordinating and pursuing their goals in SignatureFD’s four pillars of wealth activation: Grow, Protect, Give and Live.
-
How Women Can Turn a Gray Divorce Into a Financial Win
Getting divorced later in life can be a big financial blow, especially for women. But, as this financial adviser points out, it can also serve as a positive turning point for growth and independence.
-
Popes Live Longer: Four Ways You Can Too
With all eyes on the conclave, it's hard to miss that popes live longer and are able to work into their 80s. Here are four of their strategies you can try.
-
How Women Can Turn a Gray Divorce Into a Financial Win
Getting divorced later in life can be a big financial blow, especially for women. But, as this financial adviser points out, it can also serve as a positive turning point for growth and independence.
-
Stock Market Today: Stocks Slip for a Second Straight Day
Solid earnings but mixed guidance amid more tariff uncertainty have markets searching for direction.
-
How to Get Your Finances Back on Track After a Divorce
Taking charge of your money after a divorce will feel daunting, especially when you're faced with a lower income. The key is tackling your to-do list in stages.
-
Six Ways to Use AI to Improve Your Financial Life
While they can't replace human advisers, AI-based tools can take some of the guesswork out of financial tasks — from budgeting to filing taxes and investing.
-
REAL ID Alternatives to Fly Domestically
Alternative forms of ID to use at airports if you didn't get a REAL ID in time for the May 7 deadline.
-
Private Markets: Six Things Investors Can Learn From BlackRock's CEO
BlackRock's chief executive, Larry Fink, recently argued the case for increased access to private markets. Here's how a financial professional sees Fink's views translating into action for accredited investors.
-
I Found Out What It Takes for a Family Business to Thrive
A handy book and my chat with the chairman of Community Coffee offer some guidance on making your family business a success.
-
Stock Market Today: S&P 500, Dow Snap Win Streaks
Berkshire Hathaway shares tumbled after Warren Buffett said he'll step down as CEO of the holding company at the end of the year.