Tax Planning That Happens While the Year Is Still Open

Proactive tax planning is the practice of forecasting your tax position during the year, identifying the legal strategies that change it, quantifying each one in dollars, and executing before the deadlines pass. That's the whole definition. Everything else is detail.

Contrast that with how most people experience their accountant: one meeting in spring, a number they can't change, and a vague suggestion to "track your expenses better." By the time a return is being prepared, the year is a closed book. You can report it accurately, but you can't improve it.

Our planning engagements run on a cadence: a baseline forecast, quarterly check-ins as income and life change, and a year-end execution sprint. If you want the conceptual background on how planning engagements work across the industry, our guide to hiring a tax strategist covers it without the sales pitch.

Tax preparation and tax planning get conflated constantly, usually by firms selling prep at planning prices. Here's the honest comparison:

We do both, deliberately, because a plan that isn't reflected on the return is worthless and a return with no plan behind it is a missed opportunity. Our tax planning overview shows how the two services fit together.

A plan is only as good as the strategies it evaluates. These are the core areas we model, and the full library lives in our strategies hub:

• Entity structure and compensation — Schedule C vs. S-Corp optimization, reasonable compensation analysis, accountable plans, and fringe benefits.
• Retirement plan stacking — solo 401(k), SEP, defined benefit and cash balance plan feasibility for high-profit years.
• Real estate strategy — short-term rental treatment, Real Estate Professional Status, cost segregation timing, and passive loss planning.
• Equity compensation — RSU withholding correction, ISO exercise modeling around AMT, and sale sequencing across brackets.
• Charitable structure — donor-advised funds, bunching, and appreciated-asset gifting tied to income spikes.
• Roth strategy — backdoor and mega backdoor Roth contributions, and conversion windows in lower-income years.
• Timing and estimates — quarterly projections, income and expense timing, and withholding fixes that stop underpayment penalties.

Take a composite scenario: a consultant with $400,000 of net profit, currently filing as a sole proprietor, no retirement plan beyond an IRA. Here's the kind of analysis a planning engagement runs.

Self-employment tax. As a sole proprietor, the full $400,000 of profit is subject to self-employment tax — 15.3% on earnings up to the Social Security wage base, with the Medicare portions continuing above it. With an S-Corp election and a defensible salary of, say, $180,000, payroll taxes apply to the salary while the remaining profit flows through as distributions not subject to self-employment tax. The plan models the actual difference for his numbers — and weighs it against payroll costs and state-specific wrinkles.

Retirement stacking. The S-Corp salary supports a solo 401(k) with employee deferrals plus employer profit-sharing contributions; at his income, a cash balance plan layered on top could shelter six figures of additional income at his marginal rate. Whether that's worth the administration cost is a math question the plan answers — not a guess.

The QBI interaction. Consulting is a specified service business for the Section 199A qualified business income deduction, which phases out at higher incomes — and salary and retirement contributions change the phase-out math in both directions. This is exactly the kind of interaction that breaks rule-of-thumb advice and is why we model the whole picture before recommending anything.

Q1 — Baseline. Build the income forecast, fix withholding and estimated payments, confirm entity and payroll setup, and lock the strategy list for the year.

Q2 — Mid-year adjustment. True up the forecast for bonuses, equity vesting, property purchases, and practice changes. Strategies get added or dropped based on what the year actually looks like.

Q3 — Pre-year-end decisions. Retirement plan establishment, charitable structure, and major purchase decisions get finalized while there's still runway to execute them properly.

Q4 — Execution. The pre-December 31 checklist: contributions funded, elections confirmed, gains and losses harvested, documentation filed. After year-end, options narrow to a small set of moves (certain retirement contributions, for example, can generally still be made up to the filing deadline) — everything else is gone.

• A written tax plan — each recommended strategy with its projected dollar impact, assumptions, implementation cost, and deadline.
• Quarterly forecasts and estimate schedules — what to pay, when, and how to avoid underpayment penalties as the year evolves.
• Implementation support — payroll coordination for entity changes, retirement plan setup alongside your administrator, and documentation standards for each strategy.
• An election map — which elections apply, their deadlines, and exactly how they'll appear on the return.
• A year-end playbook — the pre-December 31 checklist, reviewed together, so nothing high-value slips.
• A return that matches the plan — in most engagements we also file, so strategy and reporting never diverge.

• Planning is the flagship, not the add-on. Taxstra is a proactive planning firm with quantified strategy engagements at its core — not a prep shop that discovered "advisory" pricing.
• CPA + MBA + licensed real estate broker. Founder Bryan Martin is uniquely credible on the real estate strategies — STR treatment, REPS, cost segregation — that most CPAs won't touch.
• Genuine multi-state expertise. Locum tenens physicians, remote workers, and cross-state businesses are core clientele, not edge cases.
• Established and nationwide. Roughly 1,500 clients in all 50 states, fully remote, with the review processes of a real firm.
• Trusted by the physician community. White Coat Investor platinum sponsor and podcast guest (Episode #459).
• Tech-forward. Client portal, modern tooling, and fast turnaround — planning runs on a system, not on email archaeology.