Most people think of their tax return as something to file away and forget. My fellow financial advisors and I at Hixon Zuercher look at it completely differently. 

To us, a tax return is one of the most revealing financial documents you have; it tells a story. Not just about what happened last year, but about what might need to change going forward. 

After reviewing hundreds of tax returns over the years, I’ve noticed something important…

The biggest opportunities aren’t usually hidden in complex strategies. They’re sitting in plain sight.

Here’s What I Look For When Reviewing Tax Returns:

#1. How Income Is Earned & Whether It’s Stable

Before I think about strategies, I want to understand the foundation – how income is actually being earned. 

Is it consistent W-2 income? Self-employment income? Rentals?  

A tax return (or even better a series of years of returns) can quickly show whether someone’s income is stable or unpredictable, growing or plateauing, simple or layered. Different types of income open (or limit) different planning opportunities.  

The story starts with income. 

#2. Whether Retirement (Pre-Tax) Savings Are Being Maximized

This is one of the most common “missed opportunities” I see. When reviewing your tax return, I’m looking for five things here:

  • Contributions to employer plans (like a 401(k)) 
  • IRA contributions or conversions 
  • Opportunities for self-employed individuals (SEP IRA or Solo 401(k)) 
  • Contributions to Health Savings Accounts 
  • Contributions for Dependable Care Flexible Savings Accounts for Marathon Petroleum employees with children 

Often, the issue isn’t that someone is doing something wrong – it’s that they’re not taking full advantage of what’s available. Often times people think they are “maxing” out on their retirement savings but they have been misinformed of the limits or simply thought they were closer than they really were. 

A tax return makes that more visible. 

#3. Signs of Tax Diversification (or Lack Thereof)

Not all retirement dollars are created equal. I’m looking to see: 

  1. Is everything going into pre-tax accounts? 
  2. Is there any Roth exposure? 
  3. Is there a taxable brokerage account in the mix?  

Tax diversification isn’t about saving taxes today, but creating flexibility later. If everything is pre-tax, future withdrawals may be more restrictive (and potentially more expensive from a tax standpoint). Your return can help to reveal whether someone has built-in that flexibility. 

#4. Investment Behavior Beyond Simple Results

This is where things get interesting. 

I’m looking to see any of the following: 

  • Capital gains and losses 
  • Dividend income 
  • The presence of frequent trading or large, unexpected gains 

What a tax return often shows isn’t just performance, but behavior. 

Are investments being managed tax-efficiently? Are there signs of reactive decisions? Were there opportunities to harvest losses that were missed? 

Perhaps their earned income is low enough that they could even be realizing capital gains at a 0% tax if they pulled the trigger on some sales. 

You can learn a lot about someone’s investment approach just by seeing how it shows up on their return. 

#5. Are There Any Red Flags or Missed Planning Opportunities

This is the part that’s harder to define but often the most valuable. 

Here are some examples of red flags within your tax return: 

  • Large cash balances generating taxable interest 
  • High income with little to no pre-tax savings 
  • Self-employed individuals not making estimated payments 
  • Charitable giving that isn’t being done in a tax-efficient way 
    • Donations of cash when low cost basis stock is available
    • Older retirees donating cash when they have Required Minimum Distributions that need to be filled 
  • A retiree’s income is low and they have missed free Roth conversion opportunities 

And sometimes, it’s about what’s missing. For example, if I don’t see certain forms or activity that should be there based on someone’s situation, that’s a signal worth exploring. 

Here’s An Example of What I’ll Find On a Tax Return

Every once in a while, I’ll see a non-deductible IRA contribution but no follow-up conversion. 

That tells me someone may have started the process of a backdoor Roth strategy… but didn’t complete it. Nothing was done incorrectly but something important may have been left unfinished. 

Those are the kinds of small details that can make a big difference over time. 

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A tax return really isn’t a simple record of the past, but a roadmap for better decisions going forward. 

The goal isn’t to make things more complicated. It’s to make sure nothing important is being missed. 

Because in my experience, most financial progress doesn’t come from dramatic changes. It comes from noticing the small things early and making better decisions because of them. I encourage you to sit down with your financial advisor and review your return. Not necessarily to catch errors that your tax filer made, but to take a closer look together for more opportunity.