Sample Report: NextGen Tax Insights

Unlike the Tax Snapshot (which visualises what happened in the prior year) or the Tax Projector (which models future scenarios), NextGen Tax Insights reads the return and generates specific, actionable recommendations across nine planning categories for the coming year.

This sample report for Henry E. & Mary Price covers tax year 2024 and produces a 2025 action plan spanning dependent-based planning, retirement contributions, Roth strategy, passive income, HSAs, tax-loss harvesting, hidden taxes, real estate strategies, deductions and payments, and investment tax efficiency.

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23-page AI-generated tax planning report for Henry E. & Mary Price, nine planning categories, each with 2024 findings and 2025 recommendations

Report Type: NextGen Tax Insights | Pages: 23 | Tax year: 2024

Case Overview: Henry E. & Mary Price

The following key facts from the 2024 tax return drive all nine categories of recommendations in this report.

2024 Return Key Figures

Household Profile

AGI: $281,913 (Form 1040 line 11)

MAGI: $286,383

Taxable Income: $251,260

Total Tax: $47,677 (24% bracket)

W-2 Wages: $54,461 (Form 1040 line 1a)

Schedule C Net Profit: $63,276 (self-employment)

Schedule E Passthrough: $98,914 (partnership/S-corp)

Long-Term Capital Gains: $132,600 (Schedule D)

Filing Status: Married Filing Jointly

State: Oregon (9.9% marginal)

Owns a Business: Yes (Schedule C)

Dependents: 3 children (ages ~11, ~8, ~6) + 1 grandchild (~1)

Henry Traditional IRA: $400,000

Henry Roth IRA: $20,000

Mary Roth IRA: $70,000

Mary 401(k): $90,000

What Is the NextGen Tax Insights Report?

NextGen Tax Insights is FP Alpha’s AI-powered planning report. It reads the uploaded tax return and asset inventory and generates a personalised set of recommendations across nine categories. Each category follows a consistent three-part structure:

Summary statement — the key recommendation in one or two sentences, shown at the top of each section.
What happened in 2024 — specific findings pulled directly from the tax return with form line references.
Insights for 2025 — actionable recommendations for the coming year, grounded in the 2024 data.

Key differentiator: Unlike the Tax Snapshot (a visual summary of the prior year) or the Tax Projector (a manual scenario-building tool), NextGen Tax Insights is fully automated — no advisor input required beyond uploading the tax return. The AI reads the return, identifies planning gaps, and generates the recommendations.

Nine Planning Categories: What Each Section Covers

1. Dependents-Based Tax Planning (Pages 1–2)

This section analyses dependent-related credits and education savings opportunities. For the Price household, the key findings are: no 529 accounts despite three young children, the child tax credit is available in 2025 (new $2,200 per child amount), and the student loan interest deduction is unavailable due to MAGI exceeding the phase-out threshold.

2025 Action Items — Dependents & Education

Open 529 college savings accounts for each of the three children — no 529 accounts are currently listed in the asset inventory.
Consider front-loading 529 contributions using the annual gift tax exclusion ($18,000/person) and the five-year election (superfunding up to $90,000 per child).
Claim the 2025 Child Tax Credit at $2,200 per qualifying child — MAGI of $286,383 is below the MFJ phase-out range.
Do not expect the American Opportunity Credit or Lifetime Learning Credit — no dependents are aged 17–24 and in college.
Student loan interest deduction is unavailable at this MAGI level; the outstanding $3,000 student loan balance is not deductible.
Evaluate Trump Accounts for any children born after January 1, 2025 (existing children do not qualify for the $1,000 government seed).

2. Retirement Planning, Contributions and Withdrawals (Pages 3–5)

This section covers retirement contribution strategy across three angles: maximising employer plan deferrals (W-2 wages of $54,461), establishing or maximising a Solo 401(k) or SEP IRA for the Schedule C business ($63,276 net profit), and the Roth conversion strategy given the large $400,000 Traditional IRA balance and the $84,367 of remaining room in the 22% bracket.

Strategy	2025 Limit / Key Figure	Priority
Employer 401(k) Deferral (W-2)	$23,500 (under age 50)	Maximise first — reduces W-2 wages directly
Solo 401(k) for Schedule C Business	$23,500 employee + employer profit-sharing	Combine both sides for largest deferral
SEP IRA (alternative to Solo 401k)	~25% of net SE earnings up to $70,000	Simpler setup; lower ceiling than Solo
Mega Backdoor Roth (Mary's 401k)	After-tax contributions + in-service rollover	Check if Mary’s plan permits after-tax contributions
Roth Conversion (bracket-fill)	Up to $84,367 at 22% rate	Fill 22% bracket before it closes; pro rata applies

Pro rata warning: The $400,000 Henry Traditional IRA balance means any Backdoor Roth conversion will be substantially taxable under the pro rata rule. Before executing a backdoor Roth, consider rolling the Traditional IRA into an employer 401(k) that accepts roll-ins — this can reduce or eliminate the pro rata tax hit.

3. Passive Income Strategies (Pages 6–7)

The report flags $98,914 of Schedule E partnership/S-corporation pass-through income and $132,600 of long-term capital gains as the primary passive income concerns. At MAGI of $286,383, the client is above the $250,000 MFJ NIIT threshold, exposing all net investment income to the 3.8% surcharge.

2025 Action Items — Passive Income & NIIT

Track and document hours in partnership/S-corp activities — material participation can reclassify passive income as active, removing it from the NIIT base.
If acquiring rental real estate, commission a cost segregation study to create passive losses in early years that offset passive income.
Use Solo 401(k) or SEP IRA contributions to reduce MAGI below key NIIT and IRMAA thresholds.
Review the $98,914 Schedule E income classification: if any portion is passive investment income rather than active business income, NIIT applies to that portion.
Stagger large capital gain realisations across multiple years to avoid concentrating income in a single year.
If any property is self-rented to the active business, document the arrangement carefully to preserve the correct passive/non-passive character.
Update 2025 quarterly estimated tax vouchers to include expected NIIT on passive income and capital gains.

4. Health Savings Accounts (HSAs) and Flexible Spending Accounts (FSAs) (Pages 8–9)

HSA eligibility requires a qualifying High Deductible Health Plan (HDHP). Neither spouse is over age 65 (no Medicare) and no HSA contributions appear on the 2024 return. The 2025 family HSA limit is $8,550, with no catch-up applicable yet (both spouses are under 55).

Item	2025 Limit / Figure	Action Required
HSA Family Contribution Limit	$8,550	Confirm HDHP coverage; maximise if eligible
HSA 55+ Catch-up	$1,000 (not yet applicable)	Neither spouse is 55 in 2025 — standard limit only
HSA Tax Benefit at 32% bracket	~$2,736 (32% × $8,550)	Each dollar of HSA contribution reduces federal tax by $0.32
FSA Maximum (general purpose)	$3,300	Cannot run alongside HSA; consider limited-purpose FSA (dental/vision) if HSA funded
FSA (if Mary's employer offers)	Confirm availability	Check whether general-purpose or limited-purpose FSA is offered
HDHP Family Minimum Deductible 2025	$3,300	Must meet this to qualify for HSA contributions
HDHP Family Max Out-of-Pocket 2025	$16,600	Upper limit for qualifying HDHP coverage

5. Tax Loss/Gain Harvesting (Pages 10–11)

The client holds large taxable brokerage positions (Henry Brokerage, Mary Brokerage, Joint Savings) and realised $132,600 in long-term capital gains in 2024. The existing loss carryforward is only $3,500 ($500 short-term + $3,000 long-term), providing minimal offset capacity. At MAGI $286,383, both capital gains tax (15%) and NIIT (3.8%) apply to harvested positions.

2025 Action Items — Tax-Loss Harvesting

Implement systematic loss harvesting in Henry Brokerage, Mary Brokerage, and Joint Savings to build offset capacity against the $132,600 annual gain run-rate.
Each harvested loss reduces both capital gains tax (~15%) and NIIT (3.8%) — a combined effective savings rate of approximately 18.8% on each dollar of loss harvested.
Losses that offset ordinary income are limited to $3,000/year; amounts above that carry forward to offset capital gains dollar-for-dollar.
Avoid wash sales: do not repurchase the same or substantially identical security within 30 days; use substitute ETFs to maintain market exposure.
Remaining taxable income room to the 20% LTCG tier is approximately $302,590 — time realisations to stay in the 15% band where feasible.
Coordinate harvesting with Roth conversions: both increase taxable income, so model the combined effect before executing either.
Adjust 2025 quarterly estimates if TLH materially reduces expected capital gains tax.

6. Additional or Hidden Taxes (Pages 12–13)

The report identifies NIIT exposure as the primary hidden tax risk. With MAGI of $286,383 above the $250,000 MFJ threshold, the 3.8% NIIT applies to net investment income. AMT is not a current concern. The 0.9% Additional Medicare Tax on wages/SE income is not triggered because combined W-2 wages and SE earnings are below the $250,000 MFJ threshold.

Tax	Threshold (MFJ)	2024 Status	Action
Net Investment Income Tax (NIIT)	$250,000 MAGI	EXPOSED — MAGI $286,383	Reduce MAGI via retirement contributions; harvest losses
IRMAA Medicare surcharge	~$212,000+ MAGI (varies by tier)	Monitor — approaching lower tiers	Avoid large Roth conversions that spike MAGI
Additional Medicare Tax (0.9%)	$250,000 W-2 + SE wages	NOT triggered — wages + SE = ~$60,510	Monitor if W-2 or SE income increases substantially
Alternative Minimum Tax (AMT)	Complex calculation	NOT applicable in 2024	No action required at current income levels

7. Real Estate Tax Strategies (Pages 14–16)

The 2024 return shows no direct rental income (Schedule E Part I rents = $0), but the client receives $98,914 of partnership/S-corp pass-through income that may include income connected to real property held inside an entity. The $132,600 of long-term capital gains may include proceeds from real estate sales eligible for 1031 exchange treatment.

2025 Action Items — Real Estate

Identify which Schedule E and Schedule C entities actually own or operate real property; compile purchase price, land/building allocation, and depreciation basis.
If qualifying commercial or residential rental property is owned, commission an engineering-based cost segregation study to reclassify 5/7/15-year property and accelerate depreciation (20–40% reclassification on a $1M building = $200K–$400K moved to shorter-lived classes).
File Form 3115 (automatic accounting method change) to adopt cost segregation results for 2025 if a study is obtained.
If investment real estate is sold in 2025 and produced the Schedule D capital gain, evaluate a 1031 like-kind exchange: identify replacement property within 45 days, close within 180 days, use a qualified intermediary.
Check Real Estate Professional (REP) status: if either spouse documents >750 hours in real property trades or businesses (and more than half their personal service time), cost segregation losses may offset non-passive ordinary income.
Confirm Oregon state conformity with federal 1031 and bonus depreciation rules before executing any exchange or method change.
Adjust 2025 estimated tax payments if cost segregation or a 1031 exchange materially changes taxable income.

8. Deductions, Credits, and Payments (Pages 17–20)

This section consolidates three sub-topics: pre-tax retirement contribution strategy to reduce MAGI (covered above), the backdoor Roth pathway and pro rata rule (covered above), and SALT deduction strategy under the new OBBBA rules, plus safe harbor estimated tax planning.

Sub-Topic	2024 Baseline	2025 Recommendation
Standard Deduction (2024)	$29,200 claimed	Bunch SALT + charitable in 2025 to exceed standard deduction and benefit from higher OBBBA SALT cap (AGI under $500K)
SALT Deduction	Not itemised in 2024	Oregon SALT + property taxes may push past standard deduction if bunched with charitable giving
Donated Appreciated Securities	No mention in 2024	Use brokerage positions (long-term gains) as charitable gifts to donor-advised fund — avoids capital gains and gets full FMV deduction
Safe Harbor 2025	$48,519 paid in 2024	110% of $47,677 = $52,444.70 minimum for 2025. Projected tax likely far exceeds this — increase quarterly estimates.
Estimated Payments	$42,886 estimated + $5,633 withheld	Review Q1 2025 estimated payment immediately; 2025 tax likely $89,877+ based on Projections report

9. Investment Strategies for Tax Efficiency (Pages 21–22)

The final section addresses asset location — ensuring the right investments sit in the right account types to minimise overall tax drag. With $132,600 in annual capital gains, $98,914 in pass-through income, and large taxable brokerage balances alongside retirement accounts, asset location is one of the highest-value planning levers available.

Account Type	Preferred Holdings	Avoid
Taxable Brokerage (Henry, Mary, Joint)	Broad index ETFs, tax-managed funds, municipal bonds, long-term buy-and-hold equities	REITs, high-yield bonds, actively managed funds, frequent trading
Traditional IRA ($400K Henry)	Tax-inefficient income producers: REITs, high-yield bonds, actively managed fixed income	Capital gains-generating investments (tax deferral wasted)
Roth IRA (Henry $20K, Mary $70K)	Highest-growth assets: small cap, emerging markets, aggressive equity	Income-generating holdings (tax-free growth best on high-appreciation assets)
Mary's 401(k) ($90K)	Tax-inefficient holdings similar to Traditional IRA	Same as Traditional IRA guidance

Municipal bonds: Given Oregon’s 9.9% marginal state income tax rate, Oregon municipal bonds may offer a significantly higher after-tax yield than equivalent taxable bonds for this client. Run the after-tax yield comparison (taxable yield × (1 − federal + state marginal rate)) before any fixed-income purchase in the taxable accounts.

Priority Action Summary for 2025

Top 10 Actions from This Report

1. Open 529 accounts for all three children — no education savings currently in place.

2. Maximise 401(k) deferrals and establish Solo 401(k) or SEP IRA for Schedule C business income.

3. Roll $400K Traditional IRA into employer 401(k) plan (if plan accepts roll-ins) before executing any Backdoor Roth conversion.

4. Execute bracket-fill Roth conversion up to the 22% threshold ceiling ($84,367 remaining room).

5. Implement systematic tax-loss harvesting in taxable brokerage accounts to build offset capacity against $132,600 annual gain run-rate.

6. Increase 2025 quarterly estimated tax payments to at least $52,444.70 (110% safe harbor) — actual projected tax likely $90K+.

7. Confirm HDHP coverage and maximise HSA contributions ($8,550 family limit) if eligible.

8. Commission a cost segregation study if any pass-through entity owns commercial or residential rental property.

9. Bunch state/local taxes and charitable giving into a single year to exceed the standard deduction and benefit from the OBBBA SALT cap increase.

10. Review asset location across all accounts: move REITs and high-yield bonds into tax-advantaged accounts; hold tax-efficient ETFs in taxable brokerages.

How to Use This Report in Client Meetings

1	Open with the Priority Action Summary. The ten prioritised items give the client an immediate, concrete to-do list before you walk through any individual section.
2	Work through each section in priority order for this client. For the Price household the highest-impact categories are: retirement/Roth strategy (large IRA balance, bracket room), NIIT/hidden taxes (above the $250K threshold), and investment asset location (large taxable balances with annual capital gains).
3	Use the What happened in 2024 findings to build credibility. Every recommendation is grounded in specific form line references from their actual return. Clients respond well to seeing their own numbers reflected back.
4	Pair NextGen Insights with the Tax Projector for forward modelling. NextGen identifies the opportunity; the Tax Projector quantifies the impact. For example: the report recommends increasing 401(k) deferrals — the Projector can show exactly how much that reduces AGI and total tax in 2025.
5	Flag time-sensitive actions. Some items have deadlines: SEP IRA contributions can be made up to tax filing plus extensions; 1031 exchanges have strict 45-day identification and 180-day closing windows; HSA contributions must be made before tax filing.

Ready to generate a NextGen Tax Insights report for your client?

Upload the client’s tax return and asset inventory, then open the NextGen Tax Insights section from the client dashboard.

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Disclaimer: Information provided is for educational purposes. Your advisor does not provide tax, legal, or accounting advice. In considering this material, you should discuss your individual circumstances with professionals in those areas before making any decisions.