If you have $1 million or more in investable assets, tax season is a good time to step back and look at how your investment decisions affected your taxes over the past year, and what adjustments should be made for the year ahead. Taking that closer look now can help you avoid unpleasant surprises when the next tax bill arrives. That’s where tax-aware investing should move higher on your financial priority list.
Tax-aware investing is like planning a road trip with toll booths on every stretch of the highway. If you constantly take the most direct route without thinking about the tolls, you may reach your destination faster but spend far more money along the way. Tax-aware investing seeks smarter routes that minimize unnecessary tolls, so more money stays in your pocket.
Every dollar of tax is one less dollar for your future use.
Tax-aware investing considers how all your options interact to maximize your net impact. When you view your portfolio activity and the taxes it generates together, it becomes easier to see how the different pieces of your financial puzzle are connected.
When investments, charitable giving, retirement contributions, and taxes are viewed together rather than separately, patterns and opportunities become much clearer.
At Proper Wealth, we specialize in helping successful individuals who have been managing their finances independently work with a coordinated team of financial planners and investment advisors in Tallahassee.
In this article, we’ll explore several areas that require review before filing taxes, including capital gains and tax-loss harvesting, donating appreciated assets to charity, donor-advised funds, and retirement account contributions.
Read our latest quick guide: How Should You Approach Financial Planning in 2026?
Why Does Tax-Aware Investing Matter for High-Net-Worth Households?
As your portfolio grows, taxes often become a more complex part of your investment decisions. It’s not simply about how your investments perform; it’s also about how those gains, losses, and transactions appear on your tax return.
One way to think about tax-aware investing is to imagine your financial life as a series of interconnected gears. When one gear turns, such as selling an investment, another gear moves as well, often in the form of a tax consequence. The larger the portfolio, the greater the impact those gears have on each other.
If you have accumulated substantial assets, you may be subject to dealing with capital gains from investments, dividends, charitable contributions, and retirement account distributions. Reviewing these elements together can help you see the full picture rather than evaluating each decision on an individual basis
Before filing your taxes, this can be the right time to pause and consider how the past year’s financial activity affected your overall tax situation. You might review whether gains were realized, whether losses were available to offset those gains, whether charitable giving could have been utilized to benefit you, or whether retirement account contributions were fully utilized.
How Does Capital Gain and Tax Loss Harvesting Work Together?
One of the most commonly discussed tax-aware strategies is capital gains and harvesting losses. This approach involves looking at your investments that have gained value and those that have declined, and evaluating whether selling both can benefit you by reducing your tax liabilities.
Think of gains and losses like two sides of a scale. When you sell an investment at a profit, the gain weighs on one side of the scale. When you sell an investment at a loss, that loss counts against the other side. In many cases, losses can offset gains, thereby reducing or eliminating capital gains taxes.
For example, imagine you sold a stock earlier in the year that produced a $70,000 capital gain. Later in the year, another investment in your portfolio declined significantly. If you sold that position and realized a $30,000 capital loss, the loss could offset part of the earlier gain, leaving a $40,000 net gain for capital gains’ tax purposes.
This process is often referred to as “harvesting” losses because the loss is intentionally realized to balance gains within the portfolio. It doesn’t eliminate taxes entirely, but it may influence the timing and amount of gains that appear on your return.
When reviewing your portfolio with a Tallahassee financial planner before filing taxes, examine whether positions that declined in value could play a role in balancing gains realized earlier in the year. In this case, losses can have value if they reduce tax payments.
Can Donating Appreciated Assets Improve Tax Efficiency?
If charitable giving is part of your financial strategy, the way you make donations can also influence your tax picture. Many people donate cash each year, but donating appreciated investments may yield a better tax outcome.
Consider a simple example. Imagine you purchased shares of a stock many years ago for $15,000, and today those shares are worth $60,000. If you sold the shares and donated the proceeds, the sale would likely trigger a taxable capital gain on the $45,000 of appreciation.
However, donating the shares directly to a qualified charity may produce a different result. In many situations, you may avoid recognizing the capital gain while still receiving a deduction based on the shares’ current market value, subject to IRS guidelines.
This approach allows the full value of the appreciated investment to support the charitable organization rather than being partially reduced by taxes generated from selling the asset and donating the remainder.
If you have long-held investments that have grown significantly in value, donating appreciated assets can be a thoughtful way to align philanthropic goals with tax-aware planning.
How Can a Donor-Advised Fund Support Strategic Giving?
A donor-advised fund (DAF) offers another way to structure charitable giving. You can think of a donor-advised fund as a charitable giving account that allows you to make contributions now while distributing gifts to charities designated by you in the future.
When you contribute assets to a donor-advised fund, you generally receive a charitable deduction in the year the contribution is made. Those assets remain in the fund and can be granted to the charities of your choice in the future.
This strategy can be helpful if you have an unusually high income year or want to consolidate multiple years of charitable contributions into a single tax year. For example, you might contribute $100,000 of appreciated stock to a donor-advised fund this year and then recommend grants to several charities over the next few years.
Some families also explore double-gifting strategies, in which charitable contributions and family gifts are made in the same year. For example, you may choose to transfer assets to family members within annual gifting limits while also contributing appreciated investments to a donor-advised fund.
While each action serves a different purpose, coordinating them can help align family planning, charitable intentions, and tax awareness within the same financial framework.
Are You Taking Full Advantage of Retirement Account Contributions?
Another area worth reviewing before filing your taxes is retirement account contributions. Even if you already have significant retirement savings, these accounts can still play a meaningful role in managing taxes from year to year.
For the 2026 tax year, contribution limits have increased modestly. Investors can contribute up to $24,500 to a 401(k), with an additional $8,000 catch-up contribution for those age 50 and older, bringing the potential total to $32,500.
For IRAs, the contribution limit is $7,500, with a $1,100 catch-up contribution for individuals age 50 and older, for a total of $8,600.
If you are self-employed or run a small business, SEP IRAs and solo 401(k) plans may allow substantially higher contributions, depending on your income.
A helpful way to think about retirement accounts is to picture them as different types of tax containers inside your overall portfolio. Each container holds investments, but the tax rules governing them may differ substantially.
Some accounts, such as traditional IRAs or traditional 401(k)s, may allow contributions that lower taxable income in the year the contribution is made. Others, such as Roth IRAs and Roth 401(k)s, are funded with after-tax dollars but may allow withdrawals later in life without federal income taxes if certain conditions are met.
Looking closely at whether you fully used these contribution opportunities before filing your return can sometimes affect the year’s overall tax outcome. In many cases, investors find that retirement accounts are not just long-term savings vehicles; they can also play an important role in annual tax planning.
Why Do Many High-Net-Worth Individuals Coordinate Taxes and Investments?
As wealth grows, financial decisions are rarely made independently of one another. Selling investments, making charitable donations, contributing to retirement accounts, and managing investments can all affect one another.
It can be helpful to think of these elements as pieces of a financial puzzle. Each piece, including investments, taxes, charitable goals, and retirement planning, connects with the others to form a much larger picture that fits your goals and requirements.
When these pieces are reviewed separately, important connections can be missed. When they are reviewed together, the broader financial picture often produces greater clarity.
For this reason, many individuals with significant assets view tax planning as an ongoing part of investment management rather than something that occurs only during tax time.
How Can Proper Wealth Help Coordinate Tax-Aware Investment Planning?
Tax planning is rarely about a single tactic. Instead, it involves understanding how income, investments, retirement accounts, charitable giving, and long-term goals interact with ever-changing tax regulations.
At Proper Wealth, our team of financial advisors begins the tax planning process by asking questions to better understand your current financial situation, concerns, and goals. The right questions help uncover opportunities that might otherwise go unnoticed.
When we understand your complete financial situation, we can help connect the moving parts of your financial life more thoughtfully.
- What tax bracket are you in now, and will it be changing any time soon?
- How will selling investments affect your capital gains taxes?
- Are you maximizing your 401(k) and IRA contributions this year?
- How will your retirement income be taxed in the future?
- Will selling a business or property create a large tax bill?
- Can charitable giving reduce your taxable income?
- Will your estate face federal or state taxes?
- Did you realize significant capital gains during the year?
If you’re ready to discuss your tax planning needs, connect with our team today.
