Done with Your Taxes? Check These Key Line Items

If you’ve finalized your tax return, a few key line items can provide valuable insight into what’s driving your results—and where adjustments could improve your outcome in 2026. Here’s what to check on your form 1040.

Adjusted Gross Income (AGI)

→ Form 1040, Line 11

Your Adjusted Gross Income is one of the most important numbers on your return. It determines eligibility for a wide range of deductions, credits, and planning opportunities—from Roth IRA contributions to Medicare premium brackets.

A higher-than-expected AGI can quietly limit your flexibility, while a lower AGI can open the door to more tax-efficient strategies in future years.

Taxable Income & Effective Tax Rate

→ Taxable Income: Line 15 | Total Tax: Line 24

Taxable income shows which tax bracket you actually landed in—and whether there was room to be more strategic. Total tax (Line 24), when compared to your income, provides a clearer picture of your effective tax rate.

Understanding the difference between your marginal and effective tax rate can be particularly useful for planning strategies like Roth conversions, where the goal is often to take advantage of lower tax brackets when available.

Itemized vs. Standard Deduction

→ Standard Deduction: Line 12 | Itemized Deductions: Schedule A

Did your itemized deductions exceed the standard deduction—and by how much?

If your itemized deductions only slightly exceeded the standard deduction, there may be opportunities to better structure deductions in future years. Strategies like bunching charitable contributions or timing certain expenses can make a meaningful difference.

Refund or Amount Owed

→ Refund: Line 35a | Amount You Owe: Line 37

Did you receive a large refund, or owe more than expected?

While either outcome can be fine, large swings in either direction often signal that withholding or estimated payments could be better aligned. In most cases, we want this number to be relatively close—not a surprise.

Penalties

→ Form 1040, Line 38

Any penalties—particularly underpayment penalties—are worth a closer look.

These are one of the clearest signals that withholding or estimated payments weren’t aligned with your income throughout the year. The good news is that this is typically fixable with better planning going forward.

Capital Gains and Losses

→ Schedule D (flows to Line 7 on Form 1040)

Your return also shows whether gains were realized or losses were harvested during the year.

In more volatile markets, harvesting losses can help offset gains and reduce taxes over time. Reviewing this section can help inform how to approach tax-aware investing in the future.

Bottom Line

Your tax return isn’t just a record of what happened—it’s a blueprint for what to improve.

By reviewing a few key line items each year, you can better understand what’s driving your results and identify opportunities to be more intentional in the year ahead.

If you’d like, we’re happy to review your return with you and highlight areas to focus on for 2026.