Year-End Tax Planning for High Income Individuals and Business Owners
Smart year-end tax planning helps you reduce taxes, avoid surprises, and enter the new year with clarity. Below are the essential moves I walk clients through every year.
1. Know Your Projected Tax Liability
Run a tax projection so you understand:
Expected taxable income
Marginal tax bracket
Whether you’re hitting phaseouts or surtaxes
Estimated tax shortfalls or overpayments
This determines whether you should accelerate deductions, defer income, or adjust withholding before December 31.
2. Maximize Retirement and HSA Contributions
High-impact reductions include:
401(k) and 403(b) deferrals
Backdoor Roth contributions
SEP IRA or Solo 401(k) contributions for business owners
HSA contributions (triple tax benefit)
These moves lower taxable income while building long-term wealth.
3. Use Capital Gains and Losses Strategically
Before year-end, evaluate:
Tax-loss harvesting opportunities
Realized capital gains to offset
Whether you’re carrying short-term gains
Gifting appreciated securities to avoid future tax
A quick review can meaningfully reduce your tax bill.
4. Review RSUs, ESPPs, and Stock Options
Equity comp often drives unexpected taxes. Clarify:
What vested this year
Whether to sell or hold RSUs
Timing of NQSO exercises
Whether AMT applies
ESPP qualified vs nonqualified dispositions
Coordinating these with your tax bracket prevents surprises.
5. Optimize Charitable Giving
If you already give, structure it wisely:
Donate appreciated stock
Use a Donor-Advised Fund to bunch deductions
Consider larger planned gifts if you’re in a high-income year
This increases impact and reduces taxes.
6. Confirm Estimated Taxes and Safe Harbor Requirements
Avoid penalties by ensuring you meet:
Federal 90 percent current-year or 100/110 percent prior-year safe harbor
California’s 30/40/0/30 payment schedule
A quick check now eliminates April surprises.
7. Tighten Up Business Deductions
Business owners should review:
Timing of income and expenses
Section 179 and bonus depreciation
Home office and accountable plan reimbursements
Payroll vs distribution strategy for S corps
Small adjustments can create big savings.
8. Use Your FSA and Review Benefits
Before December 31:
Spend remaining FSA dollars
Max HSA contributions
Review dependent care and commuter benefits
Simple, often overlooked wins.
9. Clean Up Records and Documentation
Make sure:
Bookkeeping is current
Receipts and support are organized
Charitable documentation is complete
Large purchases are properly categorized
This minimizes audit risk and makes tax season faster.
10. Plan for Major Life or Income Changes
Year-end planning should reflect what is happening in your life. Consider:
Job changes
Marriage or divorce
A move to another state
Real estate transactions
Inheritances or liquidity events
These shifts often require tailored tax strategy.
Year-end planning gives you control. It protects you from surprises, reduces taxes, and aligns your finances with your long-term goals. If you want a personalized projection and tailored year-end checklist, you can schedule a consultation here.