4 Smart Ways to Use Your Tax Return for Financial Planning
Don't just file your tax return and forget about it. Reviewing it will reveal how financial decisions have played out, and how to make better ones going forward.
In my work helping people think through retirement planning decisions, I often see people focus heavily on preparing their tax return but spend very little time reviewing it afterward.
By the time tax season ends, most people treat the document like a receipt: They file it, save a copy somewhere and move on.
But your tax return can actually be one of the most useful financial planning reviews you receive each year.
Article continues belowFrom just $107.88 $24.99 for Kiplinger Personal Finance
Become a smarter, better informed investor. Subscribe from just $107.88 $24.99, plus get up to 4 Special Issues
Sign up for Kiplinger’s Free 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.
Inside that document is a snapshot of how your financial decisions played out. Taking a closer look can reveal planning opportunities that may affect future tax bills, retirement strategies and other long-term financial decisions.
Whether you've already filed your return or are preparing it now, here are four areas worth reviewing.
1. Did you take the standard deduction or itemize?
One of the first things your tax return will reveal is whether you claimed the standard deduction or itemized deductions.
For the 2025 tax year (returns filed during the 2026 tax season), the standard deduction is:
- Single/married filing separately filers: $15,750
- Married filing jointly: $31,500
- Head of household: $23,625
Taxpayers age 65 and older can also claim an additional deduction:
- Single/Head of household: $2,000
- Married filing jointly/separately: $1,600 per eligible spouse
Looking ahead, the 2026 standard deduction increases slightly for inflation:
- Single/Married filing separately: $16,100Married filing jointly: $32,200
- Head of household: $24,150
The additional age-65 deduction for 2026 also rises to $2,050 for single or head of household filers and $1,650 per eligible spouse for married couples filing jointly or separately.
In 2025, the One Big Beautiful Bill Act (OBBBA) also introduced a temporary additional deduction of up to $6,000 per eligible taxpayer age 65 or older, available through 2028. This deduction begins phasing out once modified adjusted gross income exceeds $75,000 for single filers or $150,000 for married couples filing jointly.
Another important change involves the state and local tax deduction (SALT). Taxpayers who itemize can now deduct up to $40,000 in state and local taxes under current law, although the benefit phases down at higher income levels.
What to review on your return: Look at whether your return used the standard deduction or itemized deductions. If you itemized, review Schedule A to see which categories contributed most to the deduction, such as:
- State and local taxes
- Mortgage interest
- Charitable contributions
- Medical expenses exceeding 7.5% of adjusted gross income
Why this matters: For several years, many households defaulted to the standard deduction because it was significantly larger than their itemized deductions. But with recent changes to the SALT deduction and the new senior deduction, itemizing may once again be relevant for some taxpayers.
Compare your itemized deductions with the standard deduction. If the numbers were relatively close, you may have opportunities to plan ahead.
For example, some taxpayers choose to bunch charitable contributions into a single year, coordinate the timing of property tax payments or track deductible medical expenses more closely so their deductions exceed the standard deduction threshold.
Your tax return shows which deduction strategy worked best this year and whether modest adjustments could change the outcome in future years.
2. Were any Roth conversions reported correctly?
If you converted funds from a traditional IRA or another pre-tax retirement account into a Roth account during the year, your tax return provides an opportunity to review how that decision affected your taxes.
A Roth conversion moves money from a pre-tax account into a Roth account, where future qualified withdrawals are generally tax free. The amount converted becomes ordinary taxable income in the year of the conversion.
What to review on your return: Start by confirming that the conversion was reported correctly.
You should typically see:
- Form 1099-R issued by the account custodian
- Form 8606, which tracks Roth conversions and after-tax IRA basis
- The converted amount included as income on Form 1040
Why this matters: Because Roth conversions are treated as ordinary income, they can affect several parts of your tax picture.
A larger conversion could:
- Push you into a higher marginal tax bracket
- Increase the portion of Social Security benefits that are taxable
- Affect eligibility for Affordable Care Act health insurance subsidies
- Increase future Medicare premiums through IRMAA (Income-Related Monthly Adjustment Amount)
Understanding how the conversion impacted your tax return helps determine whether the strategy worked as expected. Many retirees perform Roth conversions during lower-income years, often in the period between retirement and the start of Social Security or required minimum distributions.
Reviewing how this year's conversion showed up on your taxes can help you decide whether future conversions should be smaller, larger or spread across multiple years.
Note: Medicare IRMAA premiums are based on income from two years earlier. A large Roth conversion today could increase Medicare premiums later if income exceeds certain thresholds.
3. Did a retirement account rollover accidentally create taxes?
Another area worth reviewing involves retirement account rollovers.
Rollovers commonly occur when you change jobs, consolidate retirement accounts or retire. For example, you may have rolled over a 401(k) from a former employer into an IRA.
When handled properly as a direct rollover or trustee-to-trustee transfer, these rollovers generally should not create a taxable event. However, they will still appear on your tax return.
What to review on your return: Typically you will see:
- The total distribution amount reported on Form 1040
- The taxable amount listed as zero
- The word "ROLLOVER" next to the entry
If the taxable amount is greater than zero, it may indicate that the rollover was not completed correctly.
Why this matters: Rollovers can accidentally create taxable income if they are handled incorrectly.
This can occur when a rollover is done indirectly instead of directly. With an indirect rollover:
- The funds are first distributed to you
- You must redeposit them into another retirement account within 60 days
And if the distribution came from an employer retirement plan, the plan must generally withhold 20% for federal taxes when funds are paid directly to you, unless the distribution is sent directly to the receiving retirement account or the check is made payable to the receiving plan.
If the full distribution is not redeposited within the required timeframe, part of the distribution may become taxable.
Reviewing your tax return helps confirm that retirement account transfers were handled correctly and did not accidentally trigger taxable income.
Pro tip: Whenever possible, request a direct rollover or trustee-to-trustee transfer. This avoids mandatory withholding and eliminates the risk of missing the 60-day redeposit deadline.
4. Did you receive a tax refund or owe taxes at filing?
Your tax return also reveals how closely your tax withholding matched your actual tax liability.
As income sources change, especially during the transition to retirement, withholding may no longer align with the taxes you ultimately owe.
What to review on your return: Start by reviewing two outcomes:
- Did you receive a large tax refund?
- Did you owe more tax than expected when filing?
A large tax refund may indicate that too much tax was withheld during the year. While refunds can feel like a bonus, they often represent money that could have been available to save or invest throughout the year.
Meanwhile, owing a significant balance at filing time may indicate that withholding did not account for all sources of income.
Why this matters: The federal withholding system was primarily designed for W-2 wage income. But as people approach retirement, income often shifts toward sources such as:
- Portfolio withdrawals
- Pension income
- Roth conversions
- Social Security benefits
- Consulting or part-time income
These sources may not automatically withhold enough tax.
If your withholding did not match your tax liability, adjustments may help prevent surprises next year.
Possible adjustments include:
- Updating Form W-4 with your employer
- Submitting Form W-4P for pension, annuity or periodic IRA withdrawals
- Requesting withholding from Social Security using Form W-4V
- Making quarterly estimated tax payments
Your tax return acts as a feedback loop that helps refine your withholding strategy for the year ahead.
Keep in mind: The IRS generally avoids underpayment penalties if you paid at least 90% of your current-year tax liability or 100% of the previous year's tax. For higher-income taxpayers the threshold increases to 110% of the prior year's tax.
What to do after reviewing your return
Once you have reviewed these areas, consider writing down one or two adjustments that could improve next year's tax outcome.
That might include planning charitable contributions differently, spacing Roth conversions across multiple years, adjusting withholding or ensuring future retirement account transfers are handled as direct rollovers.
None of these decisions need to be complicated on their own. But over time, small adjustments can make a meaningful difference in how much you pay in taxes and how efficiently your retirement income is structured.
Your tax return already contains the information. Taking time to review it with a planning mindset can help you use that information more effectively in the years ahead.
Related Content
- Ask the Editor: Itemized Deductions
- Not Ready to File Taxes? 8 Things to Do Now to Prepare
- Hitting Tax Deadlines Is Smart, and Year-Round Tax Planning Is Even Smarter
- Can AI Help You Find a Bigger Tax Refund? What the IRS Says About Amended Returns
- 5 Habits to Help Make Your Retirement Planning Highly Effective
