Smart Tax Planning for the Life You Are Living
While taxes are rarely anyone’s favorite topic, they do play an important role in protecting the life you have built and the flexibility you value.
Our goal is simple: reduce friction, increase clarity, and help you move through tax season feeling prepared rather than pressured.
As part of your relationship with Dorsey Wealth Management, you recently received your annual tax letter. This letter summarizes your 2025 account activity and provides your CPA or tax preparer with everything they need from our team. Please forward it to your tax professional with your other documents from 2025.
To support you further, please click here for our Tax Preparation Checklist. Use it as a guide to gather documents calmly and methodically, without the last-minute scramble - Very few people check every box and this is normal. The checklist is a reminder of what may be needed.
The filing deadline for most taxpayers is April 15, 2026.
Tax Preparation and Tax Planning
Two Different Roles, One Coordinated Strategy
Tax preparation and tax planning are often grouped together, but they serve very different purposes in your financial life. Understanding the distinction helps you see where value is created.
Tax Preparation: Tidying Up the Past
Tax preparation is about closing the books on last year. It focuses on accuracy, documentation, and compliance.
This includes:
- Collecting tax forms such as W-2s and 1099s
- Organizing investment statements and income records
- Submitting charitable, medical, and deductible expense documentation
- Filing federal and state tax returns correctly and on time
Tax preparation is essential, but it is retrospective. It reports what already happened.
Tax Planning: Designing What Comes Next
Tax planning looks forward. It connects your money decisions to the life you want to live now and in the future.
This is where we focus our work together:
- Coordinating income, investments, and retirement distributions
- Evaluating Roth strategies for flexibility and legacy planning
- Timing Social Security thoughtfully
- Aligning charitable giving with tax efficiency and personal values
- Managing taxes alongside cash flow, healthcare, and lifestyle goals
In short: Tax preparation tells you what you owed for 2025. Tax planning helps shape what you may owe in 2026 and beyond.
That ongoing, proactive thinking is the value we provide year-round at Dorsey Wealth Management.
Newer Tax Rules Affecting 2025 Filings
Charitable Deduction Updates
- Itemized charitable deductions are subject to a 0.5 percent of adjusted gross income threshold
- The tax benefit for itemized charitable deductions is capped at 35 percent
These changes continue to increase the relative value of Qualified Charitable Distributions for many households, particularly those who are charitably inclined and over age 70½.
State and Local Tax (SALT) Deduction Increase: For 2025 filings, the federal SALT deduction cap has increased from $10,000 to $40,000 for single, married filing jointly, and head of household filers ($20,000 for married filing separately).
The expanded deduction begins to phase out for higher-income households once modified adjusted gross income exceeds $500,000 ($250,000 if married filing separately). The deduction cannot be reduced below the original $10,000 ($5,000 MFS) cap.
This change may allow more households to itemize and materially increases the value of state income and property tax deductions for those below the phaseout range.
Enhanced Standard Deduction for Ages 65 and Older: Eligible taxpayers age 65 and older may qualify for an additional standard deduction of $6,000, subject to income limits. This enhancement can reduce taxable income for many retirees and pre-retirees who no longer itemize.
Direct Deposit for Tax Refunds:
The IRS has largely phased out paper refund checks. Direct deposit is now the standard method for receiving refunds and remains the fastest and most secure option.
Quick Tax Prep Tips to Get Organized
Here are some friendly reminders as you gather your documents this season:
Tip | What to Do |
Create a tax folder | Keep all tax-related documents in one place—physical or digital. This saves you time and headaches when it is go-time. |
Watch your mailbox | Tax forms usually arrive from January to the end of February. Do not forget about brokerage statements, bank interest forms (1099-INT), and any forms from side gigs or rental properties. |
Track deductions | If you itemize, gather receipts for medical expenses, charitable donations, and state/local taxes. Remember, you can only deduct medical expenses that exceed 7.5% of your adjusted gross income. |
Check for estimated tax payments | If you made quarterly estimated payments during the year, make sure you have records of those. They reduce what you owe! |
Share your tax letter with your tax preparer | Our annual tax letter will include details on distributions, contributions, and any other account activity your tax preparer needs. It is on its way! |
Moving Forward
Tax season is one moment in the year - Thoughtful tax planning supports the rest of it.
Our role at Dorsey Wealth Management is to help you make informed decisions that align your money with the life you want to live, today and in the years ahead.
If questions come up about Roth strategies, charitable planning, retirement income, or how these changes affect you personally, please reach out.
About Angela
Angela Dorsey is the founder and financial advisor at Dorsey Wealth Management, a fee-only financial planning firm based in Torrance, California, helping women prepare for retirement. Angela earned a BS in computer science from Loyola Marymount University, an MBA from UCLA Anderson School of Management, and spent 20 years as a Senior Compensation Specialist in large corporations before becoming a CERTIFIED FINANCIAL PLANNER® professional and a Registered Investment Advisor (RIA). That background gave her the tools to couple with her passion for empowering women to make the best financial decisions possible. Angela lives in Torrance, California, with her husband. She enjoys spending time at the beach or surrounded by nature. To learn more about Angela, connect with her on LinkedIn.