The Tax Planning Moves Most Professionals Miss

Something interesting happens in almost every initial meeting I have with successful professionals. Despite their career success, there’s often an underlying concern: “I make good money, but I’m not sure if I’m making the right financial moves.“

With the end of the year approaching, this uncertainty often focuses on tax planning. 

In my experience, key tax planning opportunities – or the lack thereof – usually aren’t about knowledge but rather bandwidth. When you’re focused on building your career, tax planning often takes a back seat. 

Let’s take a look at the strategies that make the biggest difference.

Retirement Contributions: The Layering Strategy

Most professionals know about maxing out their 401(k), but there’s often money being left on the table. 

For 2024, you can put away $23,500 in your 401(k), plus another $7,500 if you’re over 50, but that’s just the start.

Working with dual-professional couples has shown me that many miss the opportunities to layer different retirement accounts. 

While you might make too much for a direct Roth IRA, backdoor Roth conversions, spousal IRAs, and after-tax 401(k) contributions can create powerful tax advantages both now and in retirement. 

The key is coordinating these moves with your overall retirement strategy.

Making Market Volatility Work for You

Think of tax-loss harvesting like staying on top of regular car maintenance rather than waiting for the check engine light to come on. You can offset up to $3,000 of ordinary income with investment losses, plus balance out any gains. 

But here’s what many miss: tax-loss harvesting should be part of your regular portfolio rebalancing strategy, not a desperate December move.

This becomes especially important for professionals with concentrated positions or company stock. 

Having a proactive tax-loss harvesting strategy throughout the year helps manage the impact of any necessary portfolio changes while maintaining your long-term investment strategy.

The Charitable Giving Strategy Most Miss

Here’s something that surprises many of my clients: you can be more strategic about when you give without changing how much you give. 

Using a donor-advised fund lets you time your deductions for maximum impact while maintaining your regular giving schedule.

For professionals in high-income years – maybe from a bonus, business sale, or equity compensation event – this strategy becomes particularly powerful. You can bunch several years of planned giving together, potentially pushing you over the standard deduction threshold and maximizing your tax benefit.

Healthcare Accounts: The Strategic Advantage

Most professionals max out their traditional retirement accounts but overlook one of the most powerful tax-advantaged tools available: the Health Savings Account. 

An HSA offers unique benefits that even Roth IRAs can’t match – tax-deductible contributions, tax-free growth, and tax-free withdrawals for qualified medical expenses. 

For 2024, families can contribute up to $8,300, with an additional $1,000 catch-up contribution for those 55 and older.

Here’s what makes HSAs particularly valuable for high-earning professionals: While contributing the maximum to your HSA, consider paying current medical expenses out of pocket. 

This approach allows your HSA investments to grow tax-free over time, essentially creating an additional retirement account earmarked for future healthcare costs – which often represent a significant expense in retirement.

Creating Your Framework

Building effective tax strategies requires a comprehensive approach that evolves alongside your career progression. As your compensation becomes more complex through equity awards, bonuses, or business income, your tax planning needs to adapt and grow with you.

Your retirement contributions influence your charitable giving options. Your equity compensation shapes your investment and tax-loss harvesting decisions. Your healthcare planning connects directly to your long-term tax strategy.

Each strategy becomes more impactful when viewed as part of your broader financial picture. 

Remember, while these strategies have helped many of my clients keep more of what they earn, your specific situation – including your career stage, income level, and long-term goals – should guide your approach. 

Want to learn more about building a tax strategy that works for your situation? Let’s talk about how these approaches might fit into your financial plan.