Taxes. You can’t avoid them — but with careful, strategic planning you can significantly lower your tax bill and keep more of your hard-earned money. This blog explores key tax planning strategies, best practices, and the most common mistakes to avoid.
What Is Tax Planning?
Tax planning is the strategic process of organizing financial affairs to minimize tax liability within legal parameters. It’s proactive, considering your income, expenses, and investments. It’s not just for the ultra-wealthy — everyone can benefit, regardless of income level.
6 Tax Planning Strategies to Lower Your Tax Bill
- Deferring income — postpone taxable income to a future year to stay in a lower bracket.
- Maximizing deductions — choose between the standard deduction ($29,200 MFJ for 2024) and itemizing common expenses like mortgage interest, charitable gifts, SALT, and medical costs.
- Retirement contributions — pre-tax 401(k)/IRA contributions reduce taxable income; Roth IRAs grow tax-free with no RMDs.
- Capital gains and loss harvesting — sell underperformers to offset gains, then reinvest.
- Charitable giving — donor-advised funds give an immediate deduction; QCDs let those 70½+ donate directly from an IRA.
- Family tax planning — 529 plans grow tax-free, and the annual gift exclusion ($18,000 for 2024) is a valuable estate tool.
4 Common Tax Planning Mistakes to Avoid
- Procrastination — tax planning is a 365-day process, not an April 15th scramble.
- Overlooking retirement contributions — maxing tax-advantaged accounts means real savings.
- Misunderstanding deductions — track expenses so you know whether to itemize.
- Ignoring tax law changes — provisions from the 2017 TCJA are set to sunset after 2025.
Your Secret Weapon: A Financial Planner or Tax Advisor
A tax advisor or financial planner can identify tax-saving opportunities specific to your situation, ensuring you make the most of available benefits. Connect with our tax-savvy advisors to review your strategy.