Finally, time to take a sigh of relief… TAX SEASON IS OVER!!!! So what now? 

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For financial planners, tax planning goes beyond the annual tax filing deadline. 

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If you are a millennial reading this, we KNOW your life is complicated. You’re juggling student loans, raising families, saving for retirement, buying homes… It's a lot. That’s why, as financial planners, it is our job to consider tax implications with every financial planning decision we make. We want to take you behind the scenes and show you how Fyooz Financial Planning approaches tax planning to look at the bigger picture. 

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Step 1: Understanding Your Full Financial Picture 

At this time of the year, our clients can expect our mid-year tax planning email. We’ll ask for pay statements, tax returns, and any other information that can affect their taxes. Once we have everything, we get to work. 

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We start by reviewing pay statements and using them to project our client’s income for the rest of the year. This is when we factor in any anticipated bonuses, stock compensation, and other income sources. We then project what tax withholdings will look like and gather everything we can based on what we know today. 

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Next, we review their previous year’s tax returns. We analyze their adjusted gross income, taxable income, and any major changes in interest or capital gain income. This gives us a reference point as we project their income for the current year. 

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Once we have a solid understanding of their income projections, it’s time to start analyzing.

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Step 2: Optimizing Tax-Advantaged Accounts

Determining whether or not to contribute to a Traditional or Roth IRA can be a bit tricky, as there are many factors to consider. So, which one fits your millennial lifestyle? 

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A simple rule of thumb is this: If you believe you’re in a higher income tax bracket today than you expect to be in retirement, then go for a Traditional IRA. The goal is to defer taxes in a higher income bracket and pay taxes when you’re in a lower one. 

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In our analysis, we also confirm if our clients are reaching the maximum contributions to their tax-advantaged accounts offered by their employer.

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2025 Annual Maximum Contributions 

• 401(k), 403(b), 457(b), TSP: $23,500 
  
  • Catch-up contributions (50+): $7,500
• Flexible Spending Accounts: $3,300
  
  • NOTE: This is a “use-it-or-lose-it” type of account. We recommend contributing only what you think you would spend on medical expenses in the calendar year. 
• Limited Purpose Flex Spending Accounts: $3,300
  
  • NOTE: This is a “use-it-or-lose-it” type of account. We recommend contributing only what you think you would spend on dental and vision-related expenses in the calendar year. 
• Dependent Care Flex Spending Accounts: $5,000
  
  • NOTE: This is a “use-it-or-lose-it” type of account. We recommend contributing only what you think you would spend on childcare-related expenses in the calendar year. 
• Health Savings Accounts: $4,300 (self-only) / $8,550 (family) 
  
  • Catch up contributions (55+): $1,000
  • NOTE: An HSA is a special triple-tax advantaged account for medical expenses. Contributions are tax-deductible, growth is tax-deferred, and withdrawals are tax-free when used for qualified medical expenses. You can only contribute to an HSA if you are enrolled in a High Deductible Healthcare Plan (HDHP). And the best part? This account stays with you for your entire life! 

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Step 3: Strategic Timing & Smart Moves

I remember a professor saying, “We can’t avoid taxes (because that's illegal!), but we can defer taxes to a later time.” This is a main consideration as a financial planner because we always want to know where our clients stand with income and what opportunities are available. 

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If our client is having a low income year due to job loss or family changes, we might explore the possibilities of Roth conversions to take advantage of a lower income tax bracket than they typically would be in.

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On the flip side, if it is a high income year due to stock vesting or an amazing bonus, this is when we especially look into tax advantage accounts. 

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Once we gather ALL of this juicy income information, we run it through our tax software to get a preliminary look at potential federal and state tax payments or refunds. From there, we can determine if our clients need to make quarterly tax payments throughout the year or adjust their tax withholdings.

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Step 5: Filing Isn’t the Finish Line

Tax planning is a continuous, strategic process that can identify opportunities throughout the year. We make sure to adjust our projections, especially when year-end bonuses or restricted stock options vest, to ensure we’re dealing with the most accurate figures. 

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Fyooz Financial Planning is not a “one-sit fits all” kind of firm. Instead, we create a tax plan unique to your situation. If you’d like guidance on personalized tax planning built specifically for you, feel free to schedule a free consultation with us! 

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Disclaimer: This article is for informational purposes only and is not a recommendation of Fyooz Financial Planning, Natalie Slagle CFP®, or Daniel Slagle CFP®. Past performance may not be indicative of future results and may have been impacted by events and economic conditions that will not prevail in the future. Therefore, it should not be assumed that future performance of any specific security, investment product or investment strategy referenced in the article, either directly or indirectly, will be profitable or equal to the corresponding indicated performance level(s). No portion of the article shall be construed as a solicitation to buy or sell any specific security or investment product or to engage in any particular investment or financial planning strategy. Any reference to a market index is included for illustrative purposes only, as it is not possible to directly invest in an index. Indices are unmanaged, hypothetical vehicles that serve as market indicators and do not account for the deduction of management fees or transaction costs generally associated with investable products, which otherwise have the effect of reducing the performance of an actual investment portfolio.