A Mid-Year Tax Checkup Can Save You Money (and Headaches) Later
Spring isn’t just for cleaning out closets and booking beach getaways—it’s also the perfect time to clean up your finances and take a closer look at last year’s tax return.
At BayView Financial Planning, we believe that a tax return isn’t just a historical document—it’s a roadmap to smart financial planning for the year ahead. Reviewing your 2024 return can uncover opportunities to reduce your 2025 tax bill, adjust withholdings, and make strategic decisions about income, benefits, and savings. Each spring/summer, we do a tax return review and analysis for our clients.
What to Review in Your 2024 Tax Return:
Anticipate Changes in 2025
Will your life change in 2025 (marriage, divorce, deployment, job change)? Think about how that will affect your tax return in 2025. Will your filing status change?
Withholding Adjustments
Did you owe more than expected or receive a large refund? It’s time to revisit your W-4(s). Military families with dual incomes or changing duty stations are especially prone to withholding issues.
From the Blog: Tax Refunds: A Bonus or An Interest Free Loan to Uncle Sam
Taxable vs. Nontaxable Income
Military pay, BAH, BAS, VA disability, and combat zone pay are treated differently—are you tracking what’s taxable? Are you taking advantage of the benefits at lower tax brackets such as Roth conversions and retirement contributions?
Retirement Contributions
Did you max out your TSP, Traditional and/or Roth IRA, and Spousal IRA? What about
catch-up contributions if you’re age 50+ and the new catch-up contributions if you’re age 60-63?
Tax Credits You Did (or Didn’t) Qualify For
Child Tax Credit, Dependent Care Credit, and Education Credits often go unclaimed or miscalculated. If your income or family situation changed, you might now qualify.
Capital Gains or Losses
Review realized gains/losses and ensure investment activity is aligned with your tax and financial goals. Especially during market volatility like we’ve seen recently, there could be opportunities for tax loss harvesting and rebalancing.
Charitable Contributions
Did you itemize, or take the standard deduction? You could consider bunching donations or making Qualified Charitable Distributions (QCDs) if age 70½+ from an IRA, or donating low cost-basis stock from a taxable account.
Health Savings Account (HSA) Activity
Are you taking full advantage of HSAs if eligible? They have triple tax benefits: deductible contributions, tax-free growth, and tax-free withdrawals for qualified expenses.
From the Blog: Triple Tax Benefits: The HSA Is A Powerful Employee Benefit
Education Savings Opportunities
If you have children or grandchildren, contributions to 529 plans may be state-tax deductible and are always federal tax-free when used for qualified expenses. 529 Plans can be used for so much more than just 4-year college tuition!
From the Blog: Reviewing the Benefits of the 529 Savings Plan
State Tax Considerations for Military Families
Know the rules around military spouse residency and state tax exemptions—these can dramatically reduce your tax burden.
Now Booking Tax Return Reviews for Spring and Summer
This is a complimentary part of our planning process for all clients and a great opportunity for new clients to get started.