Our Process for Reviewing Your Tax Plan
A tax planning review isn't just a box to check. It's a key part of managing your financial life—especially if you're a business owner, high earner, or someone with complex income streams.
Here's how we approach it, combining financial planning expertise with digital marketing insights to keep you informed and in control.
1. Tax Return Review
We start by thoroughly reviewing your latest tax return. This helps us identify any errors or missed opportunities that could affect your financial standing. Typically, this is done even before you file the final return. Common issues we look for include:
Incorrectly reported backdoor Roth contributions
Omitted charitable donations
Restricted Stock Units (RSUs) taxed incorrectly
Unreported profit-sharing contributions
Missing Form 8606 for backdoor Roths
Absent gift tax returns after significant 529 plan contributions
By catching these issues early, we help you avoid overpaying taxes and ensure your financial records are accurate.
2. Safe Harbor Planning
To avoid underpayment penalties, we assist you in meeting safe harbor requirements:
Paying 110% of your previous year's tax liability
Or 90% of your current year's estimated tax
For instance, if you owed $250,000 in taxes last year, you'd need to pay $275,000 this year to meet the 110% threshold. If you've already withheld $100,000 through payroll, you'd need to make up the remaining $175,000 in quarterly payments of $43,750.
We tailor this strategy based on your income projections, ensuring you stay compliant without overpaying.
3. Actual Tax Liability Planning
Safe harbor payments prevent penalties, but they don't reflect your actual tax liability. We project your total tax obligation for the year, allowing you to:
Allocate funds appropriately throughout the year
Avoid cash flow issues in April
Make informed decisions about business distributions and personal spending
This proactive approach helps you manage your finances more effectively and reduces stress during tax season.
4. Strategic Tax Planning
We identify tax-saving opportunities tailored to your situation, such as:
Implementing cash balance plans
Maximizing deductions and credits
Optimizing retirement contributions
Utilizing donor-advised funds
Considering entity structure changes
Direct indexing
Donor-advised fund contributions
Qualified Charitable Distributions from IRAs
etc.
Additionally, we explore strategies that may increase your current tax liability but offer long-term benefits, like:
Roth conversions
Tax gain/loss harvesting
Mega backdoor Roth contributions
Back door Roth Contributions
Roth Contributions to a 401(K)
etc.
Our goal is to align your tax planning with your broader financial objectives, ensuring you make decisions that support your long-term wealth.
I cover a lot of these planning topics specifically in other articles. Here is a link to my entire catalog: Finn Price Blog
Effective tax planning is an ongoing process that requires attention throughout the year. By staying proactive and informed, you can optimize your tax situation and support your financial goals.
Visit my site -> finnprice.com
Business Owner Education on a Weekly Basis -> Newsletter
Subscribe to the Youtube Channel for more video content -> Finn Price Youtube
About the author: Finn Price, CPFA, CEPA, is a business owner and wealth manager at Railroad Investment Group. He helps successful entrepreneurs & individuals with concentrated stock positions in their 30s, 40s and 50s build, organize, protect and transfer their wealth.
Note: this article is general guidance and education, not advice. Consult your money person or your attorney for financial, tax, and legal advice specific to your situation.
Securities and advisory services offered through LPL Financial, a registered investment Advisor, Member FINRA/SIPC.
