Last week, we covered the propensity of Americans to set Tax Planning on the shelf after April 15, only to dust it off and start over in about 50 weeks. Doing so can be costly, as these taxpayers may be ignoring opportunities to save on taxes for the next cycle. Retirement Planning can also be slighted by ignoring Tax Code changes and contribution increases available to taxpayers.

Tax Planning in the modern era goes back to the 1990s, with the passage of the Taxpayer Relief Act of 1997. In my opinion, Congress never received sufficient credit for this law, which granted taxpayers (and savers) opportunities to enhance our financial futures. It was in the 1997 Act that the Roth IRA was created, ushering in an era of tax-free growth and income.

Additionally, in the 1997 Act, qualified sellers were treated to an exemption from gains realized on sales of primary residences, up to $250,000 for singles and $500,000 for married couples. In our day jobs as financial advisors, we have suggested that most Members of Congress likely failed to read the Bill before signing on, as most of them would never have agreed to such a taxpayer-friendly provision.

Following the 1997 Act, every few years, Congress produced significant Tax Code changes, mostly favorable to taxpayers. This past week, Americans filed their Tax Returns (except for those who chose the available Automatic Extension) in the most favorable taxation environment I can remember. According to the IRS, tax refunds are the largest in recent memory, reflecting policy changes codified by recent legislation.

Speaking of refunds, taxpayers who receive large refunds should be triggered to engage in immediate Tax Planning. While fun to receive (and to spend), large refunds are indicative of sub-optimal preparation. The most obvious (and frequently discussed) improvement in the financial lives of the high refund group is to stop making interest-free loans to Uncle Sam. While Money Market interest rates are down from last year, they remain significant, and the interest income should be realized by the taxpayer, not by Uncle Sam.

Other possibilities can be even more financially rewarding. Increased limits for contributions to Qualified Retirement Accounts enable taxpayers to reduce current taxes and increase eventual retirement income. Debt reduction is also a money saver, and can be enhanced by reducing paycheck tax withholding to accelerate monthly debt payments from stronger cash flow.

Decreasing payroll withholding (or reducing Form 1040-ES Quarterly Tax Deposits) leads to smaller refunds, which isn’t as much fun, but financially, those lesser refunds rock. Don’t delay Tax Planning if you are serious about retirement income.