Tax Strategy
A return records the year that already happened. Planning is what shapes the next one.
Most people encounter their tax situation once a year, in spring, when a preparer asks for documents. By then the year is closed. Whatever might have been handled differently has already passed.
Tax strategy is the work that happens before that point. It covers the decisions made during the year that determine what eventually appears on the return: when income is recognized, which accounts it comes from, how gains and losses are timed, how charitable giving is structured, and how this year's choices affect the years that follow.
None of that gets decided in April. It gets decided in the eleven months nobody is thinking about taxes.
Why we treat this as a year-round process
Tax Strategy
The Planning Year
A tax return shows the year that already happened. The decisions that shaped it were made months earlier.
Filing season reports the prior year · December 31 closes most planning windows
Look back, then set the baseline
- Read the return that was just filed for what it says about the year ahead
- Confirm prior-year retirement and health savings contributions landed where they were meant to
- Note what has changed: a raise, a new employer, a move, a marriage, a birth, a retirement date coming into view
- Establish an expected income range for the current year
Build the projection
- Project the full year while there is still time to influence the outcome
- Compare withholding and estimated payments against that projection
- Flag known events ahead: a business sale, a vesting schedule, an inheritance, a sabbatical, a first year of retirement
- Identify whether this is shaping up to be an unusually high or unusually low income year
Model the options
- Run scenarios against your actual projection rather than a rule of thumb
- Evaluate whether a Roth conversion* belongs in the picture this year, and if so, at what size
- Give charitable strategies enough runway to be structured properly rather than rushed
- Check that retirement plan contributions are on pace instead of stacked into December
Act before the window closes
- Most planning opportunities are calendar-year and end on December 31
- Finalize conversions, gifting, and portfolio-level decisions
- Address realized gains and losses with the full year's picture in view
- Complete plan contributions and any required distributions
And outside the calendar. Market moves and liquidity events arrive on their own schedule. Some opportunities appear without warning, which is why a portfolio is worth monitoring year-round rather than reviewing once each spring.
Illustrative only. Which items apply, and when, depends entirely on individual circumstances. Proper Planning & Wealth Management and LPL Financial do not provide legal advice or tax services. Please consult your legal advisor or tax advisor regarding your specific situation.
What Goes Into a Tax-Aware Plan
A tax picture is rarely one large problem. It is usually several smaller ones that compound quietly over a decade. When we review a household's situation, these are the areas we work through.
Where income comes from, and when. Salary, business income, distributions, Social Security, and portfolio income are treated differently and land in different years. The sequence matters as much as the total.
The mix of account types. Tax-deferred, tax-free, and taxable accounts each behave differently in retirement. The balance among them, and the order they are drawn from, shapes the tax picture for decades.
Where investments are held. The same portfolio can produce different after-tax results depending on which holdings sit in which account type.
The timing of gains and losses. Realized gains and losses are one of the few levers with genuinely flexible timing, and they are far easier to manage when someone is watching the portfolio throughout the year.
How charitable giving is structured. For households that give regularly, the structure and timing of that giving are often worth as much attention as the amount.
Employer benefits and equity compensation. Deferred compensation, stock plans, ESOPs, and retirement plan elections all carry timing decisions that are easy to miss and difficult to undo.
For business owners: entity structure and plan design. How the business is organized and what retirement plan it offers affect both the owner's outcome and the employees'.
Estate and gifting considerations. Decisions made now determine how much of what you have built reaches the people and causes you intended.
Three Situations Where Planning Tends to Matter Most
The years around retirement. The window between leaving work and starting Social Security and required distributions is often the most flexible tax period of someone's life. Income is low, the drawdown has not started, and there is real room to make deliberate choices. It is also temporary!
Business owners. A sale, a transition, or a succession plan concentrates years of value into a short span. The planning that surrounds those events generally needs to be in place well before they happen.
High earners in peak earning years. When income is high and mostly fixed, the remaining flexibility is in benefit elections, charitable structure, investment placement, and retirement plan design. They can be small individually but meaningful together.
Let's Look at Your Tax Picture
The years around retirement. The window between leaving work and starting Social Security and required distributions is often the most flexible tax period of someone's life. Income is low, the drawdown has not started, and there is real room to make deliberate choices. It is also temporary, and it closes on its own schedule.
Business owners. A sale, a transition, or a succession plan concentrates years of value into a short span. The planning that surrounds those events generally needs to be in place well before they happen, not negotiated afterward.
High earners in peak earning years. When income is high and mostly fixed, the remaining flexibility sits in benefit elections, charitable structure, investment placement, and retirement plan design. Those levers are small individually and meaningful together.