Tax planning often slips to the bottom of our financial to-do lists, until a surprise bill or missed opportunity crops up. But behind the scenes, the right process for an ongoing tax strategy can put you leagues ahead, reducing uncertainty and helping you capitalize on changes. Here’s a closer look at the seven stages of tax planning, including key insights and practical actions you can take.
1. Start With a 40,000-Foot View and Know Your Whole Financial Picture
Ongoing tax planning isn’t about plugging in last year’s numbers; it’s about understanding your financial life as a living, interconnected organism. Before any technical planning starts, advisors need to take a broad, holistic view of your situation. What are your financial goals? What’s changing in your life or career? Have there been windfalls, job transitions, or planned retirements?
This is where advisors dig into your financial plan, aligning tax decisions with your goals around saving, investing, retirement timing, and giving. Every choice, from where you save to when you withdraw, ripples through your tax return.
2. Staying Nimble: Reviewing Tax Law Changes
If you think the tax code changes often, you’re right. Reviewing and internalizing new legislation is a critical (and ongoing) part of the process. Whether it’s a once-in-a-decade overhaul or annual tweaks, your advisory team should be nerding out on the details so you don’t have to. These updates can unlock new deduction strategies or impact phase-out levels for credits and benefits, so working with professionals who stay current is non-negotiable.
3. Building the Bedrock
You can’t plan what you can’t see. The team gets granular, collecting W-2s, paystubs, year-to-date income, investment earnings, and business profit projections. Utilizing specialized tax planning software (such as HolistaPlan), they create a working model of your real tax situation for the current and future years. This modeling is foundational so that projections, not just historicals, drive your strategy.
4. Finding Your Opportunity Set
Not all tax advice fits every life stage, but you generally fit into one of three broad categories:
- Those earning more now than they expect in the future (often mid-career earners approaching retirement)
- Those with lower current income compared to future years (early-career or post-retirement, pre-Social Security individuals)
- Those with steady, level income (often retirees past required distributions)
Categorizing helps identify the highest-impact moves based on your trajectory, not just your present.
5. No More Tax Surprises
Next: crunching the numbers to forecast what you’ll owe, or refund you’ll expect, before taking any action. The goal? No surprises come tax season. If you’re facing a potential bill, you have time to adjust withholding or make estimated payments. Large refund? You might be withholding too much, effectively giving the government an interest-free loan. Accurate projections give you control over your cash flow and peace of mind.
6. Evaluating Opportunities
Now, with full context, the real value emerges. Advisors match your projections with possible tactics: maximizing pre-tax or Roth savings, harvesting capital losses (or even gains in low-income years), timing deductions for maximum impact, considering Roth conversions, and more. This is where the magic happens, refining the blueprint to your specific benefit.
7. Implementation and Ongoing Monitoring
A blueprint is only valuable if implemented well. Life isn’t a straight line; jobs change, markets move, and new laws pass. Professional advisors provide ongoing monitoring, proactive adjustments, and reminders about deadlines and tactical windows throughout the year. You avoid missed opportunities, stress, and costly errors.
Tax planning isn’t just filling out a return; it’s a year-round process that strengthens every corner of your financial plan. If your current approach stops at tax prep, consider how much more is possible with an integrated, forward-thinking process.
Outline of This Episode
- [00:00] Holistic Tax Planning Overview
- [01:56] Understanding clients’ overall current situation and future goals
- [03:11] Importance of staying up-to-date for maximizing client opportunities
- [05:05] Importance of gathering detailed, current financial information:
- [06:50] Identifying tax planning opportunities and potential pitfalls by life stage
- [09:53] Adjusting withholding, making estimated payments, and managing expectations
- [13:19] Identifying and quantifying strategic tax planning actions
- [18:34] Examples of in-year tax planning
Resources & People Mentioned
- The Retirement Podcast Network
- Grayson Blazek on LinkedIn
- Breaking Down the Big Beautiful Bill, Ep #243
- Holistaplan
