Tax Prep vs. Tax Planning for Cardinal Employees

A guide to understanding the difference — and why it matters to you

Every year around this time, most people at Cardinal are thinking about taxes in the same way: gather the documents, upload the W‑2, hope the software or preparer doesn’t ask too many questions, and get it over with. That’s tax prep — and it’s necessary.

But tax planning is something different. It’s quieter, more strategic, and typically far more valuable over the long run. And with several meaningful changes taking effect, now is a good time to understand the difference. And with several meaningful changes always happening in the background, this is a good time to understand why planning matters.

Think of it like walking a trail: tax prep is checking your map at the trailhead. Tax planning is choosing the right route before you ever get there.

Where Tax Prep Stops

Tax preparation is backward‑looking. It answers one question: “What happened last year, and how do I report it correctly?”

For Cardinal employees, that usually means:

• W‑2 income
• 401(k) contributions
• LTI transactions
• HSA contributions
• Bonus payouts
• Charitable giving
• Mortgage interest and property taxes

Prep is important — but it doesn’t change anything. It simply reports what already happened.

Where Tax Planning Begins

Tax planning is forward‑looking. It asks: “What decisions can I make this year to reduce surprises/taxation in future years?”

For Cardinal employees, tax planning often touches:

• Deciding how much to contribute to the 401(k) and HAS
• Choosing the right mix of Roth vs. pre‑tax contributions
• Managing the tax impact of LTI transactions — when to sell and when to hold
• Evaluating whether itemizing will matter again once the SALT cap increases
• Understanding how catch‑up contribution changes may affect your paycheck
• Seeing how AGI changes could affect future Social Security taxation
• Determining how much to save outside of Cardinal benefits and in which types of accounts
• Choosing the right college‑savings vehicle — 529, custodial accounts, “Trump accounts,” etc.

These are the kinds of decisions that shape your long‑term financial picture — not just your refund.

Why Tax Planning Matters

The biggest opportunities in tax planning rarely come from a single rule change. They come from coordinating decisions across your entire financial life:

• Your income
• Your bonus structure
• Your retirement contributions
• Your LTI
• Your HSA strategy
• Your itemized vs. standard deduction decision
• Your long‑term goals

When these pieces work together, the long‑term tax savings can be significant — often hundreds of thousands of dollars over a lifetime.

Tax prep looks backward. Tax planning looks forward. And the forward view is where real value lives.

Take care and, as always, stay the course.

_{Colburn Wealth Management, LLC is a registered investment adviser. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk and, unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein. Past performance is not indicative of future performance.}