Now that Tax Season has finally come to an end, thanks to an extension granted by the federal government, you may find yourself ready to put financial planning on the back burner. While this is an extremely common inclination, the post-tax day lull actually provides a fantastic opportunity to spend some time considering the bigger picture.
For business owners, nonprofit leaders, and professionals across Chattanooga, financial planning today involves much more than simply reducing tax bills. It requires an ongoing strategy that considers investment decisions, retirement planning, future tax exposure, and long-term goals as a unified endeavor.
Tax Needs Worth Reviewing
By the time most people sit down with their CPA in March or April, the majority of opportunities to meaningfully reduce taxes for the prior year have already passed. That’s why some of the most effective planning happens now, while there’s still time to make proactive decisions for the year ahead.
Instead of asking, “How can I save the most money on taxes this year?” the better question is often: “How can I make smarter long-term financial decisions that also improve my tax situation over time?”
As you’re revisiting your strategies, consider:
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- Retirement contributions: Retirement accounts remain one of the most effective tools for both long-term investing and tax efficiency. Many business owners and employees contribute consistently to 401(k)s or IRAs without regularly evaluating whether those contributions still support their goals.
If your income has changed, your business has grown, or your expenses look different from what they did a few years ago, now is a good time to check on contribution levels and account structures.
- Retirement contributions: Retirement accounts remain one of the most effective tools for both long-term investing and tax efficiency. Many business owners and employees contribute consistently to 401(k)s or IRAs without regularly evaluating whether those contributions still support their goals.
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- Picking a quarterback: A great financial planner will work alongside your tax professionals to optimize financial opportunities. While it’s critical to ensure your financial planner and accountant are following the same roadmap, it’s even more important to be sure you know who’s quarterbacking the entire financial process. Then, be sure to update other providers about who is taking on that role.
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- Tax-advantaged accounts: While tax-advantaged savings accounts do come with their own unique rules, there may be ways to maximize savings while simultaneously lowering your taxable income. Be sure you’re taking advantage of opportunities like these by speaking with your financial advisor. Be sure to ask if any new developments have occurred since you set up your initial plans.
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- Future tax exposure: Many retirees and pre-retirees save diligently, but almost entirely in tax-deferred accounts. While that can create upfront tax savings during working years, it may also produce larger taxable distributions later in life. Work with your financial advisor to find the right balance for both the current year and the future.
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- Estate and legacy planning: Tax planning also extends beyond investments and retirement accounts. This is a good time to look at:
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- Beneficiary designations
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- Trust structures
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- Charitable giving plans
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- Succession planning for business owners
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- Endowment or reserve planning for nonprofits
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The Bottom Line
The most effective financial planning rarely happens during a single meeting at tax time. It’s an ongoing process that evolves alongside your career, family, business, and goals.
As we move further into the year, now is an ideal opportunity to evaluate your broader financial strategy — not just to prepare for next April, but to create a more intentional and tax-aware plan for the years ahead.
Zach Hurst, CFP®, is Vice President and Managing Director for the Chattanooga office of The Trust Company of Tennessee.
