Key Takeaways
- Treat tax strategy as a year-round process, not a once-a-year filing exercise.
- Coordinate with financial and tax professionals throughout the year to identify opportunities for efficiency.
- Review contribution limits, charitable rules, and estate thresholds periodically to see how legislation may have changed.
- Consider how income timing, Roth conversions, and charitable giving affect your overall tax picture.
Why Think About Taxes Beyond Filing Your Return?
Filing your tax return reports what has already happened. Managing taxes effectively means looking forward and making decisions that can influence future outcomes. While Wednesday, April 15, 2026, is an important date to have on the calendar, the real opportunity lies in taking a broader approach—viewing tax strategy as a year-round process that helps avoid paying more than required by law.
This February, while taxes are already top of mind, it may be a good time to discuss with your financial and tax professionals how to shift from reactive tax preparation to a more proactive tax strategy for 2026 and beyond.
This article is for informational purposes only. Please consult your tax, legal, and accounting professionals before making changes to your tax strategy.
What Is the Difference Between Tax Preparation and Tax Strategy?
A tax strategy is an ongoing approach that considers your past, present, and future income, capital gains, and portfolio structure in order to manage your tax burden over your lifetime.
Tax preparation, by contrast, is the necessary annual process of filing your tax return with the IRS.
How Does Tax Preparation Work?
Tax preparation involves gathering your financial information and completing your tax return—typically a once-a-year activity that happens after the tax year has ended. You can prepare your taxes yourself, use online software, or work with a professional.
Because it is backward-looking, your ability to influence the outcome is limited once the year is over.
What Makes a Tax Strategy Forward-Looking?
A forward-looking tax strategy focuses on decisions that can influence what you pay in taxes over time. This typically involves reviewing past decisions and identifying future opportunities with your financial and tax professionals.
Having a strong tax strategy does not necessarily mean receiving the largest possible refund. In many cases, it means making thoughtful decisions today to improve long-term outcomes.
Common elements of a year-round tax strategy include:
- Income timing
- Tax-advantaged investing
- Charitable giving optimization
- Tax-loss harvesting
- Estate and gift tax planning
How Can Income Timing Help Manage Your Tax Burden?
Income timing seeks to manage tax liability by shifting taxable income or deductible expenses between calendar years when possible. For example, one approach may be to defer income into a future year and accelerate deductions into the current year. However, if you expect to be in a higher tax bracket next year, accelerating income into the current year might be worth considering.¹
Not all income can be shifted, but there may be flexibility with bonuses, self-employment income, or certain retirement plan distributions (excluding RMDs). Because the rules and tradeoffs can be complex, professional guidance can be helpful.¹
What Is Tax-Advantaged Investing, and Why Does It Matter?
Another way to manage taxable income is through tax-advantaged investing.
Traditional IRAs and employer-sponsored plans like 401(k)s are common examples. Contributions may be deductible or pre-tax, and investments grow tax-deferred until withdrawn, when they are taxed as income.¹
For 2026, you can defer $24,500 into your 401(k) (up from $23,500 in 2025), and those age 50 and older can contribute an additional $8,000.²
SECURE 2.0 introduced several changes:
In 2026, workers age 50+ who earned over $150,000 in the prior year must make catch-up contributions as Roth contributions.²
Participants ages 60–63 can make “super” catch-up contributions regardless of income. For 2026, that limit is $11,250.²˒³
Because rules continue to evolve, coordination with professionals helps ensure decisions stay aligned with current law.
How Can Charitable Giving Support Your Tax Goals?
Charitable giving reflects your generosity, and it can also be structured to help manage your taxable income.
Changes Under the OBBBA: The OBBBA introduced several charitable giving rule changes effective in 2026.3
- Above-the-line charitable deduction: New for non-itemizers—$1,000 (single) or $2,000 (joint) for cash gifts to public charities (excluding Donor-Advised Funds (DAFs) and supporting organizations).
- New Adjusted Gross Income (AGI) floor: For itemizers, only charitable contributions exceeding 0.5% of AGI are deductible.
- 35% deduction cap: For taxpayers in the top bracket, the value of itemized deductions—including charitable gifts—is capped at a 35% benefit.
Qualified Charitable Distributions (QCDs): Individuals age 70½ and older can make tax-free donations directly from an IRA to a qualified charity, receiving the tax benefit while potentially satisfying all or part of their annual RMDs. For 2026, the QCD limit rises to $111,000.4
Donor-Advised Funds (DAFs): A DAF functions like a charitable investment account. You can contribute cash, securities, or other assets, generally receive an immediate tax deduction, and recommend grants to IRS-qualified public charities over time.⁵
The DAF structure provides immediate tax benefits from contributing to a public charity, while also offering ongoing control over your philanthropy. You can contribute when it makes sense from a tax perspective, then distribute grants to charities according to your preferred timeline and giving goals.5
Some Donor-Advised funds are considered mutual funds and are sold only by prospectus. The prospectus will provide information on charges, risks, expenses, and investment objectives and should be reviewed carefully before investing. Investment companies can provide a prospectus, or you may prefer to ask your financial professional. Please read it carefully before you invest or send money.
Bundling Charitable Deductions: Combining multiple years of giving into a single tax year may help exceed the standard deduction and allow itemizing. In 2026, with the standard deduction at $16,100 (single) and $32,200 (joint), many households may not otherwise benefit from itemizing. Bundling can be especially useful in higher-income years.⁶
Where Do Roth Contributions and Conversions Fit In?
Roth IRAs involve paying taxes today in exchange for tax-free growth and withdrawals in the future, provided certain rules are met. Contributions are made with after-tax dollars.⁷
A common planning question is whether a Roth conversion makes sense. This involves moving pre-tax retirement assets into a Roth account, triggering taxes in the year of conversion but potentially allowing tax-free withdrawals later. Because the converted amount is taxable, a conversion can result in a larger-than-expected tax bill.⁷
To manage that impact, some people convert smaller portions over multiple years rather than all at once.
Roth conversions aren’t right for everyone, and tax rules continue to evolve, so both current tradeoffs and future uncertainty should be considered.⁷
What Is Tax-Loss Harvesting, and When Might It Apply?
Tax-loss harvesting uses realized investment losses to offset capital gains. While tax considerations shouldn’t drive investment decisions, selling investments at a loss can help manage taxable gains.
Two key rules apply: long-term losses must first offset long-term gains before short-term gains, and the IRS wash-sale rule prohibits repurchasing the same or substantially identical security within 30 days of the sale.¹
How Do Estate and Gift Tax Changes Affect Wealth Transfer?
The OBBBA clarifies the federal estate tax landscape by setting the estate and gift tax exemption at $15 million per individual (or $30 million per married couple), indexed for inflation. This removes the uncertainty around the Tax Cuts and Jobs Act (TCJA), which had been scheduled to cut the exemption roughly in half starting in 2026.⁸ Of course, a future Congress or Administration could always change these rules.
At these levels, over 99% of estates will not owe federal estate tax.⁹
However, some states still impose estate or inheritance taxes at much lower thresholds, so location remains an important consideration.
What Surprises Can an Effective Tax Strategy Help Prevent?
Several common tax surprises and penalties can often be avoided—or at least reduced—with better awareness and planning.
Quarterly Estimated Tax Penalties: Some types of income—such as self-employment or investment income—aren’t subject to withholding and may require quarterly estimated payments. If you don’t pay enough tax during the year through withholding or estimated payments, the IRS may assess an underpayment penalty.¹⁰
Taxes on Qualified Plan Withdrawals: Distributions from tax-deferred retirement accounts are taxed as ordinary income. Without planning, this can lead to larger-than-expected tax bills in retirement. Coordinating the timing and sequence of withdrawals can help manage the overall tax impact.¹¹
How Can a Year-Round Tax Calendar Help Keep You Organized?
A regular schedule may help keep taxes top of mind throughout the year.
- February–March: File returns or extensions, make final retirement plan contributions, review your prior-year return, and pay first-quarter estimates.
- April–June: Review income and tax status, make second-quarter payments, and begin identifying potential tax-loss harvesting candidates.
- July–September: Make third-quarter payments, review charitable giving, and evaluate the pros and cons of Roth conversions.
- October–December: Consider executing any tax-loss harvesting that you and your financial professional think aligns with your goals. Also, consider moving ahead with retirement contributions, including catch-ups, if appropriate, bundle charitable donations, if appropriate, and time bonuses strategically.
What’s The Takeaway on Year-Round Tax Awareness?
Tax preparation records what has already happened. Tax strategy helps shape what comes next. Both matter—but viewing taxes as a year-round process can help preserve and grow wealth over time.
While taxes are top of mind this February, consider shifting from an annual mindset to a year-round approach.
Cetera Wealth Services, LLC exclusively provides investment products and services through its representatives. Although Cetera does not provide tax or legal advice, or supervise tax, accounting or legal services, Cetera representatives may offer these services through their independent outside business. This information is not intended as tax or legal advice.
1 Affiance Financial, September 5, 2024.
2 BDO.com, November 2025.
3To qualify for the tax-free and penalty-free withdrawal of earnings, Roth IRA distributions must meet a 5-year holding requirement and occur after age 59½. Tax-free and penalty-free withdrawals can also be taken under certain other circumstances, such as the owner's death. The original Roth IRA owner is not required to take minimum annual withdrawals.
Once you reach age 73, you must begin taking the required minimum distributions from a traditional IRA in most circumstances. Withdrawals are taxed as ordinary income and, if taken before age 59½, may be subject to a 10% federal income tax penalty.
Similarly, once you reach age 73, you must begin taking required minimum distributions from your 401(k) or any other defined contribution plan in most circumstances. Withdrawals are taxed as ordinary income and, if taken before age 59½, may be subject to a 10% federal income tax penalty.
4 IRS.gov, December 16, 2025.
5 SilverTaxGroup.com, June 25, 2025.
6 FidelityCharitable.org, November 2025.
7 BankRate.com, May 12, 2025.
8 CPMLaw.com, July 15, 2025.
9 TaxSharkInc.com, June 17, 2025.
10 IRS.gov, November 2025.
11 Jasonfintips.com, October 8, 2025.