Year-Round Tax Planning Cycle
Coordinate income, deductions, investments, and payments before deadlines close
- Difficulty
- Moderate
- Time to result
- ~ongoing to results
- Steps
- 6
- Confidence
- 94%
This cycle embeds tax planning within cash flow, insurance, estate planning, portfolio management, and retirement decisions. Begin with a full-year projection, then identify items whose timing or structure can change, including capital gains, deductions, equity compensation, retirement contributions, and estimated payments. Model each move across both the current and future years because a deduction today may merely defer a later liability. Compare the projected tax benefit with market risk, liquidity needs, and opportunity cost before acting. Repeat the review throughout the year rather than relying solely on a December cleanup, and extend the analysis beyond one lifetime when estate or inheritance outcomes are material.
Origin
Extracted from Masters in Business, where Bill Artsmarnian described tax planning as a continuous component of financial planning rather than an isolated year-end exercise.
Core principles
- 01Treat taxes as part of every financial decision
- 02Plan proactively throughout the year
- 03Evaluate lifetime and generational consequences
- 04Compare tax savings with investment and opportunity costs
How to run it
- 1
Build the annual projection
Estimate income, gains, deductions, contributions, withholding, and estimated payments for the full calendar year.
Pro tip Refresh the projection after major compensation, portfolio, or business events.
Watch out A stale projection can make otherwise sound strategies counterproductive.
- 2
Map controllable items
Identify transactions whose amount or timing can still change, such as option exercises, gains, charitable gifts, and retirement contributions.
Pro tip Separate hard deadlines from items that can be completed when filing the return.
Watch out Do not assume every tax-saving transaction must occur on December 31.
- 3
Model multiple years
Compare recognizing or deducting each item now with moving it into a later year. Distinguish permanent savings from liabilities that are merely deferred.
Pro tip Include expected tax brackets and expiring provisions in the comparison.
Watch out A current deduction can create recapture or taxable income later.
- 4
Price the trade-offs
Compare expected tax savings with market movement, lost liquidity, transaction costs, and the opportunity cost of overpaying taxes.
Pro tip Express each alternative in after-tax dollars.
Watch out A small adverse stock move can exceed the benefit of delaying a sale.
- 5
Execute and document
Complete selected transactions before their applicable deadlines and retain confirmations, valuations, and tax records.
Pro tip Coordinate the execution with both investment and tax advisers.
Watch out Planning without timely execution produces no tax result.
- 6
Extend the horizon
Review whether retirement, estate, insurance, and gifting choices improve lifetime and generational tax flexibility.
Pro tip Favor a useful mix of taxable, pre-tax, and Roth assets where appropriate.
Watch out Optimizing only the current return can increase future family liabilities.
In the wild
An investor considering a late-2025 sale moves the gain into early 2026. That creates twelve additional months in which portfolio losses could be harvested against the gain, provided the investor remains comfortable holding the position through the delay.
→ The investor gains more offset opportunities without treating tax savings as more important than market risk.
A taxpayer projects the safe-harbor payment needed to avoid penalties instead of deliberately producing a large refund. Cash beyond the required payment remains available for investment or other near-term uses.
→ Penalties are avoided while unnecessary opportunity cost is reduced.
Common mistakes
Planning only in December
Waiting until year end eliminates opportunities that arose earlier and compresses implementation into a few weeks.
Confusing deferral with avoidance
Many deductions postpone a liability rather than eliminate it, so future taxes and recapture must be included.
Ignoring non-tax costs
Market risk, liquidity constraints, and overpayment opportunity cost can outweigh the projected tax benefit.
Is it for you?
Best for
Investors and high-earning households with flexible income, investment gains, charitable plans, or multiple account types.
Not ideal for
Taxpayers with very simple finances and no meaningful control over income, deductions, or investment transactions.
From the transcript
“Tax planning should be happening proactively for twelve months, but we don't even stop there.”
“We're not thinking about taxes as a current year item or even a lifetime item. We're thinking about this generationally.”
“The flip side of that, of course, is even a small movement in a stock price can cost more than a tax bill just to…”
From the episode
Year-End Tax Planning Moves