12 Things to Look for on Your Tax Return (That Most People Miss)

I’ll just say it upfront: if you or your advisor isn’t reviewing your tax return every year, you’re probably missing opportunities to save money and avoid overpaying the IRS.

Your tax return is like a map of your financial life. It tells the story of how much you earned, what you paid, and what might come back to bite you later if you’re not careful.

Here are 12 areas I review for many clients every year — and you should too.

1. Marginal Tax Rate: The Next Dollar You Earn

You've probably heard about tax brackets, but what does that really mean for your marginal tax rate? This is the rate you pay on your next dollar earned. People often think “I’m in the 22% bracket, so that must mean all my money is taxed at 22%.” Not quite. Only the top portion. Knowing your marginal rate helps decide whether to accelerate income, delay it, or take deductions now.

2. Average Tax Rate: The Big Picture

While the marginal tax rate is about your next dollar, your average tax rate is your actual tax bill divided by your total income. It’s the real story of how much the IRS is taking from you overall — and it’s usually a lot lower than your marginal rate. Knowing both gives you perspective.

3. Carry Forward Losses: Turning Today's Loss into Tomorrow's Gain

Have you ever sold investments at a loss in a previous year that exceeded your capital gains? You might be able to "carry forward" those losses to offset future capital gains. This is a powerful tool to reduce your tax bill in subsequent years, so it's important to track and utilize any available carry forward losses. I see people all the time who forget they have these sitting on their tax return like money in the bank.

4. IRMAA Surcharges: Medicare and Your Income

If you’re near Medicare age, watch this one closely. For those on Medicare, the Income-Related Monthly Adjustment Amount (IRMAA) can add surcharges to your Medicare Part B and Part D premiums. These surcharges are based on your income from two years prior. It's a good idea to be aware of your income levels as they relate to these thresholds, as higher income can lead to significantly higher premiums. I’ve seen people needlessly pay thousands more per year just because they didn’t plan around the IRMAA thresholds.

5. Capital Gains: When Investments Pay Off

Not all gains are created equal. Long-term gains (investments that were held over a year) get lower tax rates than short-term (less than one year holding period). Big sales can also knock you into higher brackets or trigger other taxes. Review your return to see what your gains really cost you. Long-term capital gains have more favorable tax rates than your ordinary income, so holding investments for over a year can be beneficial.

6. Qualified Dividends: A Special Kind of Investment Income

Dividends are payments made by a company to its shareholders. "Qualified dividends" are a specific type that typically receive the same favorable tax rates as long-term capital gains. Not all dividends are qualified, so it's good to understand the difference and how they're taxed. If you’ve got investments spitting off non-qualified dividends in a taxable account, you might be paying way more in taxes than you realize.

7. Roth Conversion Opportunities: Shifting Your Tax Burden

This one is big. A Roth conversion involves moving funds from a traditional IRA (where contributions are tax-deductible and withdrawals are taxed later in retirement) to a Roth IRA (where contributions are after-tax and qualified withdrawals in retirement are tax-free). This can be a smart move if you expect to be in a higher tax bracket in retirement. Pay tax now, let it grow tax-free for later. It's a big decision, so exploring the opportunities with a professional is often wise. But timing is everything.

8. Itemized vs. Standard Deduction: Which Saves You More?

When filing your taxes, you generally have two choices for reducing your taxable income: taking the standard deduction (a set amount based on your filing status) or itemizing your deductions (listing out eligible expenses like mortgage interest, state and local taxes, and charitable contributions). Most people take the standard deduction, but if you’ve got big medical bills, mortgage interest, or charitable giving, itemizing could save you more. Don’t just assume the standard is always better.

9. Net Investment Income Tax (NIIT): An Additional Tax on Investment Income

If your income is high enough, you get hit with an extra 3.8% tax on investment income. This is where smart investment location (matching the right investments with the right accounts) makes a real difference. This applies to income like interest, dividends, capital gains, and rental and royalty income. It's important to be aware of this if you have significant investment income.

10. Qualified Business Income (QBI) Deduction: A Break for Business Owners

If you own a small business, you might qualify for a 20% deduction on your business income. But it phases out as your income climbs. Missing this can mean paying thousands more than you need to. If you are an S-Corporation or run a service-based business, it’s incredibly easy to get phased out of this massive deduction if you aren’t aware of what is going on.

11. Income Phaseouts: When Benefits Begin to Disappear

Lots of credits and deductions (child credits, retirement contributions, education benefits) vanish once you cross certain income levels. Knowing where you stand helps you avoid accidentally phasing yourself out. It's crucial to understand these phaseouts, as they can affect your eligibility for various tax benefits for both now, and in the future.

12. Review of Credits and Deductions: Don't Leave Money on the Table!

This is where you can often find significant tax savings. Make sure you're aware of and claiming all the tax credits and deductions you're eligible for. I catch missed credits or deductions on tax returns almost every single year. This includes things like:

Education credits: For college tuition and related expenses.
Child Tax Credit: For eligible dependents.
Earned Income Tax Credit (EITC): For low to moderate-income working individuals and families.
Retirement contributions: Deductions for contributions to traditional IRAs and 401(k)s.
Health Savings Account (HSA) contributions: A powerful triple-tax-advantaged account.

Bottom Line

Your tax return isn’t just history — it’s a roadmap. It shows you where you are today and the potential traps waiting down the road.

Don’t ignore it. Don’t just file and forget. Review these 12 items every year, and you’ll be way ahead of the game.

And if you’re not sure how to make sense of it? That’s where I come in. My job is to work with your current tax team to make sure you’re not getting torpedoed by taxes now or later.

Frequently Asked Questions (FAQ) About Reviewing Your Tax Return

What should I review on my tax return every year?

At a minimum, you should look at your marginal tax rate, average tax rate, deductions, credits, and any carryforward losses. But a deeper review also includes items like Roth conversion opportunities, Medicare (IRMAA) surcharges, and how your investment income is taxed.

How do Roth conversions affect my tax return?

When you do a Roth conversion, money from your traditional IRA moves into a Roth IRA. That amount is added to your taxable income for the year, which can increase your tax bill now. The trade-off is that Roth money grows tax-free and can help reduce taxes later in retirement.

What is IRMAA and why does it matter?

IRMAA stands for Income-Related Monthly Adjustment Amount. It’s an extra surcharge on your Medicare premiums if your income is above certain thresholds. Planning withdrawals and conversions carefully can help you stay below those limits and avoid higher healthcare costs.

What is the difference between marginal and average tax rates?

Your marginal rate is the tax rate applied to your last dollar of income. Your average rate is your total tax divided by your total income. Knowing both helps you make smarter decisions about income timing, deductions, and investment strategies.

How are capital gains and qualified dividends taxed?

• Long-term capital gains (assets held over a year) usually get lower tax rates.
• Short-term gains are taxed like regular income and held for less than a year.
• Qualified dividends often receive lower rates, while non-qualified dividends are taxed higher.

Managing which investments you hold in taxable accounts can help reduce unnecessary taxes.

What is the Qualified Business Income (QBI) deduction?

If you own a business, you may qualify for a deduction of up to 20% of your business income. This deduction phases out once your income passes certain limits, so planning is essential to maximize the benefit.

Why do credits and deductions matter so much?

Deductions lower your taxable income, while credits reduce your tax bill dollar-for-dollar. Tax credits like education credits, child credits, and energy credits are some of the most valuable opportunities people miss. Reviewing them each year ensures nothing slips through the cracks.