Seasonal tax strategies: How to stay ahead of surprises

Taking a closer look at your tax situation can pay off year-round. Periodic tax check-ins can help you avoid surprises come April and help you make the most of available strategies. Whether you’re a standard deduction filer or managing complex investments, here are several seasonal tax strategies to consider.

Partner with trusted tax advisors

A bi-annual or quarterly check-in isn’t just about reviewing numbers—it’s an opportunity to align your tax strategy with your broader financial goals. For individuals with complex assets, business interests, or evolving estate plans, working with a trusted advisor can make all the difference. At Nixon Peabody Trust Company, we help clients navigate these touchpoints with care and clarity.

Whether you’re managing generational wealth, planning for a liquidity event, or adjusting to a major life change, our team can help you assess tax-saving opportunities, refine your withholding or estimated payments, and ensure your strategy reflects both current regulations and long-term objectives. Checking in regularly gives you time to proactively adjust course so you’re not just prepared for tax season, but positioned for what comes next.

Review last year’s tax return

Start by revisiting your most recent tax return. Did you owe more than expected or receive a large refund? Understanding why can help you adjust your withholding or estimated payments for the current year. For example, if you owed $5,000 last year and are paid biweekly, you might consider increasing your withholding to cover that difference.

Adjust withholding or make estimated payments

If your income has changed due to a bonus, investment sale, side business, etc., adjusting your withholding or making estimated tax payments may be prudent. Withholding may be preferential to many taxpayers, as the IRS treats it as pro rata over the year.

Estimated payments are especially important for self-employed individuals or those with variable or non-wage income streams. However, some taxpayers prefer to avoid them, opting instead to pay any balance due at tax time, even if it means incurring penalties. While not recommended, this approach reflects a preference for cash flow control.

Consider life changes and their tax impact

Seasonal check-ins help you assess how life changes could affect your taxes. Common situations include:

• New dependents: Children or other dependents can impact your deductions and credits.
• Homeownership: Mortgage interest and property taxes may be deductible.
• Charitable giving: Consider setting up a donor-advised fund if you plan to make significant donations.
• Gifting: If you’ve made large gifts in excess of the annual exclusion ($19,000 for single or $38,000 for married filing jointly in 2025), you may need to file a gift tax return. Gifts received, however, are not taxable to the recipient.
• Marriage: Tying the knot may change your filing status and overall tax liability. Married couples must review whether filing jointly or separately makes the most sense for their situation.

Optimize investment and retirement strategies

Markets change every day, so part of your seasonal tax strategy should be to review your investment portfolio with both your financial advisor and tax professional. Consider:

• Capital gains and losses: Maintaining guardrails on realized gains can prevent surprises at tax time, and selling underperforming assets can sometimes offset gains.
• Rebalancing: Ensure your asset allocation aligns with your risk tolerance and tax strategy.
• Tax-efficient withdrawals: For retirees, coordinate distributions from taxable and tax-deferred accounts.

Maximize tax deductions and credits

Periodic check-ins position you to make the most of deductions and credits that can reduce your tax liability. If you’re contributing to a retirement account, like a 401(k) or traditional IRA, consider increasing your contributions to lower your taxable income. The same goes for health savings accounts (HSAs) or flexible spending accounts (FSAs)—contributions to these accounts are pre-tax and can add up to meaningful savings.

It’s also worth reviewing your eligibility for tax credits, especially if your income or life circumstances have changed. Education expenses may qualify for the American Opportunity or Lifetime Learning Credit, while retirement savers with moderate income levels might be eligible for the Saver’s Credit. Planning charitable contributions or bunching deductible expenses into one year can also help you itemize and potentially get more value than the standard deduction.

Other tax planning considerations

Plan for state residency and dual-state issues

For “snowbirds” or those with homes in multiple states, tracking your residency is crucial. States like Florida have strict requirements (e.g., spending over 183 days per year) to qualify for tax benefits. Conversely, states like New York may still claim you as a resident based on time spent and other ties. Keep detailed records of your location throughout the year to support your residency claims.

Assess foreign income

If you have foreign income or assets, use your periodic check-ins to gather documentation and consult with a cross-border tax professional. While most foreign income issues are addressed at year-end, early planning and awareness of your obligations can prevent complications.

Keep accurate tax records

Staying organized now can save you a major headache next April. Use these touchpoints to make sure you’re keeping track of key documents—like receipts for charitable donations, medical expenses, childcare costs, and business-related purchases if you’re self-employed. Digital tools or even simple spreadsheets can help keep everything in one place.

Accurate records not only make filing easier but can also help you back up deductions and credits if the IRS ever comes knocking. The more proactive you are about recordkeeping now, the less scrambling you’ll do later.

Make your seasonal check-ins count

Seasonal tax check-ins aren’t just about numbers—they’re about aligning your financial goals with your tax strategy. Taking time now to review your situation can help you avoid surprises and potentially reduce your tax obligations. Nixon Peabody Trust Company can guide you through this process, offering comprehensive solutions tailored to your unique needs. Our team is here to help you make informed decisions and confidently achieve your financial objectives.

Benjamin Kuehn
Trust Advisor
Office: +1 617.345.6038
bkuehn@nixonpeabody.com