No one wants to pay more tax than required. Yet taxpayers sometimes miss valuable deductions because they overlook eligible expenses or fail to keep the necessary records.
At True North Wealth Management, we believe tax planning should work alongside your investment, retirement, and estate strategies. Here are five tax opportunities worth discussing with your tax professional.
1. Reinvested Dividends and Cost Basis
Reinvested mutual fund dividends and capital-gain distributions generally remain taxable in a taxable investment account, even though you use the money to purchase additional shares.
Those reinvested amounts also increase your cost basis. If your records fail to include them when you later sell the investment, you could report an overstated gain and effectively pay tax twice on the same money.
Many financial institutions now track basis, but investors should still retain statements and review the calculation before selling.
2. Out-of-Pocket Charitable Expenses
Cash and donated property are not the only potential charitable deductions.
When you volunteer for a qualified charitable organization, you may also be able to deduct certain unreimbursed expenses, including supplies and eligible vehicle mileage. For 2026, the charitable mileage rate remains 14 cents per mile.
Keep receipts and mileage records. Contributions of $250 or more generally require a written acknowledgment from the charity.
3. State and Local Taxes
If you paid state income tax with a prior-year return, that payment may count toward your state and local tax deduction in the year you paid it.
Taxpayers who itemize may potentially deduct eligible state and local income or sales taxes, real estate taxes, and certain personal property taxes. For 2026, the overall federal SALT deduction limit is generally $40,400, subject to an income-based reduction for higher earners.
Alaska does not impose an individual state income tax, but eligible property taxes or taxes paid to another state may still matter.
4. Medicare and Other Medical Expenses
Taxpayers who itemize may deduct eligible unreimbursed medical and dental expenses that exceed 7.5% of adjusted gross income.
Qualifying costs may include certain Medicare premiums, supplemental insurance premiums, prescriptions, deductibles, copayments, and other approved medical expenses.
Because the threshold applies to total eligible expenses, keeping complete annual records can make a significant difference.
5. Estate Tax Attributable to Inherited Income
Some inherited assets, including certain traditional IRA or pension benefits, may qualify as income in respect of a decedent.
If federal estate tax was attributable to that income, the beneficiary may qualify for an income tax deduction under special rules when reporting the inherited income. This deduction applies only in limited situations, but it can be meaningful when a taxable estate included substantial retirement or other deferred income.
Look Beyond Tax-Filing Season
The best time to identify deductions is often before the year ends, while you can still organize records and coordinate financial decisions.
At True North Wealth Management, we help clients connect investment management, retirement income, charitable giving, and estate planning with tax-aware strategies.
If you want to identify potential planning opportunities before your next return is filed, schedule a conversation with True North Wealth Management.
Important Disclosures:
This material is for informational purposes only and is not intended as tax, legal, accounting, or individualized financial advice. Most deductions require taxpayers to meet specific eligibility, documentation, and itemization requirements. Tax laws and limits may change. Consult a qualified tax professional regarding your circumstances.
The IRS confirms that reinvested mutual fund distributions become part of the basis of the additional shares purchased. For 2026, the charitable mileage rate remains 14 cents per mile, while the federal SALT limit is generally $40,400 and phases down for certain higher-income taxpayers. IRS Publication 559 also addresses the special estate-tax deduction associated with income in respect of a decedent.
1. Investopedia.com, August 24, 2025
2. IRS.gov, 2025
3. IRS.gov, 2025
4. IRS.gov, 2025
5. IRS.gov, 2025.
In most circumstances, once you reach age 73, you must begin taking required minimum distributions from a Traditional Individual Retirement Account (IRA). Withdrawals from Traditional IRAs are taxed as ordinary income and, if taken before age 59½, may be subject to a 10% federal income tax penalty. You may continue to contribute to a Traditional IRA past age 70½ as long as you meet the earned-income requirement.
The content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. This material was developed and produced by FMG Suite and customized by True North Wealth Management LLC to provide information on a topic that may be of interest. FMG Suite is not affiliated with the named broker-dealer, state- or SEC-registered investment advisory firm. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security. Copyright FMG Suite.