Once April 15 passes, there’s usually a wave of relief. Maybe you got a refund, maybe you owed more than expected. Either way, the instinct is to file tax season away and move on. Before you do, there’s one step worth taking that can make a real difference in your financial life: reviewing your tax return.
It may not sound exciting, but your tax return is full of information that can guide smarter financial decisions throughout the year. Think of it as a snapshot of your financial habits, opportunities, and potential pitfalls.
If you’ve received your 2025 tax return, we invite you to share a copy with us and schedule a review. Together, we can identify strategies to improve tax efficiency and strengthen your financial plan for 2026 and beyond.
Not currently a client? We’d be happy to connect and explore how thoughtful, proactive planning can support your long-term goals.
Start With the Big Numbers
A great place to begin is with your Total Income and Adjusted Gross Income (AGI). For those who aren’t familiar, AGI is your total income minus specific IRS deductions. These two figures influence what credits you qualify for, how much you can contribute to certain retirement accounts, and more. AGI, in particular, appears in dozens of IRS thresholds, and understanding it can help you anticipate how future decisions may affect your taxes.
Next, look at your deductions. Most households take the standard deduction, and for many, that’s the right move. However, if you have significant medical expenses, pay substantial in state and local taxes, or give generously to charity, itemizing your deductions might save you more. Reviewing what you did last year can help you plan for this one. You might consider bunching charitable gifts this year or tracking medical expenses more closely.
Your taxable income is another important figure. This is the amount the IRS ultimately taxes, and it determines your tax bracket. Understanding how it’s calculated helps you see how additional income or deductions might affect your tax bill.
Finally, review your total tax paid. This helps you evaluate whether your withholding or estimated payments were on target, or whether you should adjust them for the coming year.
Your Marginal Rate Isn’t Your Real Rate
A common misconception is that your tax bracket is the rate you pay on all of your income. In reality, the U.S. uses a progressive tax system, meaning your income is taxed in layers. For example, a single filer in 2026 pays 10% on the first portion of income, 12% on the next portion, and so on. You may fall into the 24% bracket, but your effective rate, meaning what you actually pay across all of your income, could be closer to 16%. Understanding this difference can inform decisions around strategies such as realizing capital gains or completing Roth conversions.1
Look at the Types of Taxes You Paid
Another valuable part of your return is the breakdown of the types of taxes you paid. Did most of your tax bill come from ordinary income? Long-term capital gains? Dividends? Net investment income? This matters because different types of income are taxed differently, and knowing where your taxes came from can guide your future planning decisions.
For example, if long-term capital gains made up a big portion of your tax bill, you might explore strategies such as tax-loss harvesting or direct indexing. These strategies can help you offset gains now or in future years, which is especially useful if you expect a large gain down the road. Additionally, since long-term capital gains are taxed at lower rates than ordinary income, understanding how much of your income falls into each category can help you optimize your investment approach.
If You’re on Medicare, MAGI Matters
For Medicare beneficiaries, your Modified Adjusted Gross Income (MAGI) plays a major role in determining your Medicare Part B and Part D premiums. For Medicare purposes, MAGI is generally your AGI plus any tax-exempt interest. Higher MAGI means higher premiums, so managing your income becomes especially important.
This becomes even more relevant once Required Minimum Distributions (RMDs) begin, typically around age 73. RMDs are mandatory withdrawals from pre-tax retirement accounts, and they count as ordinary income. As a result, they can push you into higher Medicare brackets whether you want them to or not.
If you’re charitably inclined, Qualified Charitable Distributions (QCDs) can be a powerful tool. A QCD allows you to send money directly from your IRA to a charity. The amount counts toward your RMD but doesn’t show up as income on your tax return, which may help keep your Medicare premiums lower. In 2026, you can contribute up to $111,000 in QCDs per person, or $222,000 for a married couple where both spouses are 70½ or older and have their own IRAs.
Standard vs. Itemized Deduction
For the 2025 tax year, the standard deduction ranged from $15,750 for single filers to $31,500 for married couples filing jointly, with heads of household falling in between. As you review your 2025 return and plan ahead for 2026, it is also helpful to note that the standard deduction will increase to $16,100 for single filers, $24,150 for heads of household, and $32,200 for married couples filing jointly.2
You can either take the standard deduction or itemize deductions on Schedule A, depending on which provides the greater benefit. Itemized deductions may include medical expenses, state and local taxes, mortgage interest, and charitable contributions.
Two new considerations under the One Big Beautiful Bill Act (OBBBA) are worth noting. First, a 0.5% AGI floor now applies to charitable contributions for all itemizers, meaning only the portion of your giving above 0.5% of AGI is deductible. Second, taxpayers in the top 37% bracket see the tax benefit of their itemized deductions capped at 35 cents on the dollar. If your itemizable expenses are within striking distance of the standard deduction, bunching charitable gifts or medical procedures into a single year can tip the math in your favor.
Why This Review Is Worth Your Time
Your tax return is more than a form you file once a year. It’s a roadmap that connects directly to your investment strategy, retirement planning, estate planning, charitable giving, and even healthcare costs. Once you start looking at your return through a holistic planning lens, you’ll see how interconnected these areas are. A thoughtful review can uncover opportunities, help you avoid surprises, and ultimately keep more of your money working for you.
Whether you have questions about your recent return or want to explore these planning strategies further, your Crestwood team is here to help. If you are not currently a client, we welcome the opportunity to connect and discuss how thoughtful planning can support your long-term goals, contact us.
