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These aren't edge cases. They're the normal milestones of life in your 20s and 30s. Every one of them is a planning window -- and every one of them closes.
What proactive tax planning actually looks like
Tax planning happens during the year. Not in April.
By the time you're answering TurboTax's questions, the decisions that determined your tax bill have already been made. What you're doing in April is recording them, not changing them.
The way I think about it:
- Your CPA handles what already happened. They're looking back at the year and filing an accurate return.
- A financial planner handles what's coming. Reviewing withholding when your income changes. Deciding how much goes into traditional vs. Roth. Timing contributions before year-end. Coordinating the strategy so your CPA has something to work with.
- When both are working the same case, you stop leaving money on the table.
My client left $19,915 on the table because no one was looking ahead.
Now someone is. And it shows up in the numbers.
Other things worth reviewing now
A few other situations where proactive planning tends to pay off:
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Big commission year. If you're on pace to earn significantly more than last year, your withholding may not reflect your actual bracket. Getting ahead of that now avoids a large bill in April.
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New job or company switch. Old 401(k) sitting at a former employer? That's a rollover opportunity, and potentially a Roth conversion opportunity if the timing is right.
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First year earning real income. Most new AEs default their 401(k) to Roth because someone said Roth is always better. At $200K+ income, that may be exactly backward. The deduction on a traditional contribution at 32% is real money today.
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Having kids. Child tax credits, dependent care FSA, childcare deductions -- most people find out about these after the fact instead of before.
The year is almost halfway through. Whatever changed in the last 12 months, now is the time to make sure someone is looking at what it means for the rest of this one.
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