After filing taxes, it’s crucial to shift from a reactive to a proactive mindset. In our latest podcast episode, Victor and Carolyn discuss practical steps to optimize your tax planning process and set yourself up for financial success in the upcoming year.
Key Topics
- The importance of viewing tax season as a strategic planning opportunity rather than just compliance
- How to check and adjust your withholdings throughout the year
- Recognizing the difference between tax prep and tax planning
- Tips for maintaining organized tax documentation digitally
- The impact of recent legislative changes, including the "One Big Beautiful Bill" Act
- Strategies for investors and self-employed individuals to manage ongoing tax obligations
- The benefits of mid-year reviews for adjusting financial plans
- How to maximize deductions and credits in upcoming tax years
- The value of working with a professional for ongoing tax strategy
Full Transcript of the Episode
Victor Gaxiola
Well, welcome back everybody to the Resilient Investors Podcast and joining me again now is Carolyn. As you all know, Kim is currently away. She'll be away for a few episodes but I thought that the last time Carolyn was not participating because she was deep in the middle of finishing off taxes. So we reached April 15th, big day. It's funny, a lot of people get so excited about April 15th from a tax season standpoint because it's the last day, got a file. I get excited because that's Jackie Robinson Day.
Carolyn Rowland
Yes
Victor Gaxiola
We're an all-new team, we're a 42, huge Dodgers fan, so that certainly makes me happy watching all that. Carolyn, we are now talking today about the post-tax season reset. And so, you know, now that you've kind of had a little bit of an opportunity to decompress, maybe relax a little bit, it's one of those things that unfortunately, right, as soon as you get done with one tax season, another tax season starts, right? So today in this podcast, we really wanted to share, I guess, some best practices from your perspective as well or specifically from your perspective, about what are some things that people can start thinking about given the fact that they just filed taxes or perhaps an extension about what to do so that it's not as laborious and perhaps it makes more sense for them as they start looking towards 2027 and their tax season for 2026. So why don't we start there. That's a lot. Yeah.
Carolyn Rowland
Is that wild? We just wrapped up 2025. We're currently in 2026. So we're already thinking about 2027. But yes, it's good to be done. It's funny. I love that aspect of what I do, right? The tax prep, the tax planning, but it uses a different part of my brain. And when it's done, I'm like ready to get back into the advisory side and then planning and. It's not like, obviously tax prep isn't solely what I do. It's like, this isn't something I want to do 365 days of the year. So I like that it's 10 weeks. Sometimes I feel like 10 weeks isn't enough for what we're trying to accomplish. But the biggest thing I think to take away is like this 10 week period, it's not just like survival mode, like getting your taxes done right. Like we really want to shift the mindset to be more strategic and thinking ahead and being proactive.
And the key takeaway that I hope we kind of get to address today is that, know, tax prep, not the same as tax planning. Tax prep is kind of just, you know, that reconciliation of all the planning and the strategy that we've implemented. So happy to be here. Happy it's after April 15th. Yes, I definitely took some time. You know, that day hits and I just kind of disappear for 24 hours, come back and make sure everything's okay and take it easy and, you know, get back to it...but yeah, here we are now.
Victor Gaxiola
Yeah, and your birthday falls in and around the time. So that adds another element, right? Fortunately, it's after tax day, Fortunately, it's after tax day, is it not?
Carolyn Rowland
My gosh, I know. I like to thank my parents. Say that again. It is after tax day, but I have had my birthday fall on tax day before because Emancipation Day is right around that. so like depending on when April 15th falls, especially if it's a weekend, can push to the 16th or the 17th. Yeah. So, but usually my birthday. Yeah. Happy birthday to me, it's my birthday. Wow, wow. Well, you know, there's a, it's so funny because my experience with taxes, it seems to get more and more complicated. I guess the older you get, the more assets you own, the more things that you're involved in. But I remember when I was young and I look at my kids who are filing taxes now because they're working and they earned income. And for them it's like that 1040 EZ So it's like a one pager super easy. And for the most part, they oftentimes get money back. So they see it as like a bonus.
Carolyn Rowland
Yes
Victor Gaxiola
So it's been a long time since I've gotten a check back from either the Fed or the state. But then, as I got older and older, I realized, well, it's not necessarily a great thing if you're getting a big check, right? So I think that talking about the difference between tax practice and tax planning, it's almost a difference between survival and strategy. That's the other part. I want to talk about the tax hangover check. I love that term- the tax hangover check. So let's talk about that a little bit.
Carolyn Rowland
It is, it is a hangover. Not just, I'm sure for, you know, individuals filing their taxes, I felt it too, just, you know, in it for 10 weeks. But I think a lot, it's interesting because over that 10 week period, just, you know, looking at it from my perspective, like I have my early filers, it's usually people that are getting refunds, and then my filers that come in, you know, like March, early April are people that typically owe. So it's funny. And what I will say is I did notice a lot more refunds this year and I will attribute that probably to the One Big Beautiful Bill Act and we'll get into that and some of the things that changed in 2025 retroactively that we got to see. Yeah, but then those that owed, that I even saw more of, but the biggest thing that I, there's two takeaways from that, why people are owing is you gotta check your withholdings, especially with a job change and my dual income households,
You have to just check. And that's one of those things that, you know, working with Resilient Wealth Planning, you know, we do so much tax planning throughout the year that like, I'm catching that rate. Like that's something that we're proactive about. But, you know, I do serve a handful of clients that don't necessarily use us for advisory and it's still really important to review your withholding so you don't owe. And I mean, the IRS has this nice withholding calculator too, where you can kind of go in and like say, hey, this is my income. This is how much I get paid. It does a pretty good job and tells you exactly how you should be filing those W-4s with your employer. But kind of on the flip side for those that get those huge refunds and one thing that I always hear, know, it's so nice to get that refund. It's worth savings.
So for clients that, you know, on the flip side, we're getting big refunds. I did notice that, you know, we'll talk about it like, hey, it might make sense to reduce your withholding just so have more money in your pocket on a monthly basis. But a lot of people might think that, well, it's a really great for saving strategy, which like, That's not wrong, right? But you're essentially giving the IRS a free loan at that point, because they're not giving you money back if you over withheld. I mean, they'll charge you a penalty if you under withhold, like bet on the flip side, right? So there's got to be a fine line. But I would much rather somebody be really close to kind of that break even or within $1,000 of getting a refund just so you can be more proactive with your money on a monthly basis throughout the year, right? And then on the flip side, you know, we want to make sure you're not owing more than $1,000 because the IRS will come after you from a penalty standpoint. And that was a big thing that I noticed this year where penalties were a lot higher because interest rates have gotten to where they are, right? Like the IRS is probably charging about seven to 8 % when you annualize that on late payments. So it really adds up. Yeah, it's up there. It's not like the good old days where it was at best 3%.
Victor Gaxiola
And it's a big slap in the hand and like those that are actually getting a large refund check always remind people, it's not necessarily a good thing just because you just gave the government an interest-free loan. And it's like, I get it, it's kind of nice to think of it as an additional bonus and such, but you can plan for that throughout the year from the standpoint of like you said, and a lot of it is kind of moving the levers on the withholding or not withholding and just taking a little bit more control over that whole process.
Carolyn Rowland
One thing that you had mentioned, talking about your kids and how easy their filing is versus yours and it's different. You're a business owner, maybe you have some investment income. I think things shift. I don't think I know. They shift from when you're in these accumulation years, early earning years, and then you start building your investment income, that portfolio. There's different parameters to consider and your taxes change. so a lot of that too might even be like...hey, I'm gonna recommend that you make quarterly estimated tax payments if your investments are generating enough income because you don't have an employer that's withholding that, right? Especially if you're self-employed. So big thing to make sure we got eyes on.
Victor Gaxiola
Yeah, so one thing that I was kind of curious about, and this always gets me, is we're trying to move more more paperless, but you know, so a lot of our stuff tends to be electronic, which is nice, because when you do your taxes, you might be able to piece that together. But I am curious, are there certain things that people should hold onto, you know, as far as throughout the year? or perhaps based on the tax documentation that they get or tax documents you get those that say tax import and information. Once they file their taxes, do they hold on to that or can they get rid of it?
Carolyn Rowland
I mean, don't get rid of anything right away, right? Especially on the, like you as the individual, like I personally don't need documentation of everything, but I can't promise the IRS won't come knocking or asking for substantiation. So definitely keep your tax returns for at least six or seven years and the supporting documentation, right? Anything that you're claiming as far as deductions. A lot of like W-2s and things like that. I mean, they're available on, you know, through the IRS, through the transcripts request, you know, bank statements, tax documents, so at least six or seven years, statements, stop, like shred that, you don't need that. Everything's accessible digitally, but then, I really, if I don't know, like, just create a digital copy of something and like create a folder, right? Like, my clients have access to our client portal, just like pop it in there, anything you get throughout the 2026 tax year, especially if you're making charitable contributions throughout the year and you wanna...document that and not forget about that. So I love having that digital folder, but we can definitely start to shred, but not everything.
Victor Gaxiola
There are some really great tools out there. mean, it's interesting. I started documenting like the miles on the car, especially for business owners that perhaps are using their car and their vehicle for business purposes. And I know that there is like the ability for you to start tracking. And I found an app that did a really good job of just kind of like tracking the movement. And then from there, you can kind of make a decision and saying, okay, this is a business oriented trip versus one that was more for personal use but then later just kind of reconciled that on a quarterly basis.
Carolyn Rowland
Yeah, that's great because there's nothing worse than having to create like a mileage log at the end of the year and trying to think back on 365 days of trips and, you know, mile IQ, QuickBooks has it if you have their app on the phone where it just, you know, turns it on. So yeah, you're constantly tracking on your phone, but it's really nice that you can just swipe between like personal and business and super easy to.
Victor Gaxiola
Yeah. So I know, know it is too soon, probably not too soon. I mean, just finished the taxes are like still fresh, right? Or kind of like that hangover period posts and such. we also want to start thinking of me, like I said, at the beginning of the podcast starts looking to the future. So let's talk about some strategies and things that people can do, perhaps just to make it a little bit easier considering this is a process that should be kind of an ongoing something, not saying top of mind, but something you want to think about.
Carolyn Rowland
Mm-hmm. So, gosh, I mean, I love a good mid-year check-in. So I know it's April. Come June, it's kind of like, okay, how do my withholdings look? If you feel like you're even getting like 50 to $100 more per paycheck each month, like that's a red flag to me. I want you to kind of make sure you're withholding. Just do some simple math. Go use that IRS withholding calculator on the website at IRS.gov. That's a lot more for my, you know. Employed individuals that have payroll set up, thinking about myself, employed my business owners, we got to do a mid-year check-in, right? We got to see how your business income is tracking year to date. Are we on track? Are things up? Are things down? Because that's also going to impact the quarterly estimates that we recommend. And then we're also looking at retirement funding strategies and things like that. So there's strategies that we want to make sure that we can put into place.
Especially talking with my business owners, like, gotta keep your books clean. like, throughout the best thing you can do right now, I think is make sure your books are up to date, kind of stay on top of that, so that we have that opportunity to do tax planning throughout the year. Because if we don't have clean books, we can't do proper tax planning, unfortunately.
Victor Gaxiola
And then you had mentioned earlier too the one beautiful bill there's some additional deductions that are now available to people especially at work in certain professions.
Carolyn Rowland
Yes, absolutely. So I didn't want to forget about that. So that impacted 2025. So I can talk about the benefits there and kind of what I saw and then, you know, that'll carry into 2026 and there's more rolling out for 2026. But I think the two biggest things that I saw, I saw a lot of overtime pay deduction that like surprisingly showed up a lot and that benefited individuals kind of resulted in that refund. The tip income deduction, I did see that a little less, but it showed up every once in a while. But the biggest, biggest change I would say for my retirees, so those that were 65 and older got that additional deduction within their, you know, their specific income phase out limits, but that was…That was an additional 6,000 or 12,000 depending on, you know, if you're married or single. And then you probably are familiar with this Victor just living in California, real estate taxes, state and local income tax. That salt deduction had historically been limited to $10,000. That was now expanded. Some people might still be limited to 40,000 depending on your income, but that went up a lot. So a lot more people itemized this year actually than years past. So we're going to see that carry into 2026.
A lot of these one big beautiful bill, let's call them parameters. It just expanded that 2017 tax cuts and jobs act. So it should be good through the end of 2028. Biggest thing for 2026 is there's going to be this charitable contribution, like standard deduction. I believe right now it's up like around $2,000. So that'll be interesting. I think that'll impact a lot of people. I remember back when we were in COVID times, they had some tax changes right around that time and that above the line charitable contribution deduction was beneficial. that was like the biggest things I wanted to touch base on with the one big beautiful bill act. But yeah, everybody benefited from it whether you liked it or not initially, right?
Victor Gaxiola
I like anything that it can benefit from. And I think that the message, if we were looking at saying that this is an ongoing thing as far as the difference between tax prep and tax strategy, I think the other thing that's kind of jumping out at me, and I know this because we work in the business, is the fact that these things change and evolve over time.
And it's difficult for any one individual to really keep abreast of all the different changes. And this is why I think it helps to work with a group like ours and you specifically when it comes to tax planning, tax prep, to start thinking about.
What are all these changes? How do they impact? Being abreast, if you will, of the changes that are taking place in the taxes and specific deductions and certain programs. And then who does that benefit and how can people take advantage of those? So I think that that's really important. And then the other big takeaway that I get from a standpoint of everything is how important it is to be a little bit more proactive versus reactive. No one likes to be doing that knee-jerk reaction. And then of course you don't like getting the calls or...perhaps the reach out days before filing with, hey, I to open up an IRA or so. A lot of these things are preventable, you know, with proper, right? But it happens. I mean, we know that is gonna happen from time to time. But I think it's just important to say, you know, have that resource, have that connection of an informed individual. And we looked at Carolyn, that was one of the greatest things about, you know, us kind of coming together as a big team.
Carolyn Rowland
Yeah.
Victor Gaxiola
So having that background, having that level of understanding to kind of help the entire team and all our clients. So I appreciate that.
Carolyn Rowland
Yeah, no, I love it. And I think the best part about tax planning is obviously how it aligns with an individual's overall financial plan and kind of getting them to the finish line. But it's not necessarily just about tax savings, right? It's really about, well, how can I maximize your wealth for you? if it, like thinking about like Roth conversions and things like that, but if I can add 500,000, million more dollars to your overall net worth in the long run, that feels like a no brainer. Do the planning, yeah. So it's really cool to see that direct value added.
Victor Gaxiola
Yeah, that's awesome. Well, I say to you, you we got to celebrate those little wins. So after the tax day and such, you know, we celebrated here in our office by going out to a ball game. We weren't as involved perhaps as you were, but you know.
Carolyn Rowland
Good for you. You still need to celebrate.
Victor Gaxiola
Anyway, we celebrated and so we actually got to see the Giants and the Dodgers play here in Oracle Park. And fortunately for me, because I'm a Dodgers fan, the Dodgers won. But Lucas, Lucas certainly, we had a good time. Let's just say that.
Carolyn Rowland
And I'm actually taking my first post-tax season vacation this year. I feel like I talk about it every year. like last year was not great. I had a newborn baby during tax season. this tax season was like, well, I was blessed with Nellie last year. I was a lot more focused, a lot more time. And it was a lot more calm this year. But yeah, we're headed to a week vacation celebrating. It'll be great. Looking forward to it.
Victor Gaxiola
Good, well you deserve it. for those of you that are listening that are currently working with our team at Resilient Wealth Planning that would like to start building in a little bit more on the tax planning, we do have that as an additional resource. You can reach out to us and Carolyn is our specialist in that space and for those of you that aren't currently working with our team in any capacity, let me use this as an opportunity to kind of reinforce the fact that there's a number of different areas that we focus on. So initially a lot of our focus is on financial planning and investment management or wealth management. that's
The planning, long-term, short-term, mid-term goals, you what is it that we're trying to accomplish? What are your retirement goals and what are you looking to achieve in your investment life? The wealth management piece kind of supports that from the standpoint of how do we structure portfolios? How do we manage your investments in such a way that we can meet those goals that you establish in the financial plan? And then as part of that conversation, there's two other areas that are very important. One is the tax planning.
So as Carolyn mentioned, it's one thing to generate wealth, it's another thing to try to preserve it as much as possible and finding strategies by which you can preserve a lot of that wealth that you develop. And then the third area, and this is an area that we've really been developing in the last year or two, is the estate planning. It's looking at how we can assist you in creating that legacy or creating that nest egg that you have built up, not only to cover your needs in retirement, but for those that are so fortunate and really good stewards of their money, if you have something left over to give to the next generation or perhaps a favorite charity, we do have estate planning resources that can help you set up that will and trust and then really just basically the Hakuna Matata plan is like to say the circle of life plan for your financial life so and tax planning is an important bit of that so thanks for thanks for sharing that now that we get here on the Hangover and hope you have a great trip and the decompression when your time away like a family but and to those of you who are listening to our podcast or watching us on YouTube
Carolyn Rowland
Thank you so much.
Victor Gaxiola
We want to thank you again for joining us and we look forward to seeing you again on the Resilient Investors Podcast. Take care.
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