One of the biggest mistakes I see is waiting until December 20th to ask, "How can I save money on taxes?"
That's like asking your football coach for a new game plan with 30 seconds left in the fourth quarter.
October is an ideal window for serious year-end tax planning.
You have enough information to estimate your income for the year, and you still have time to act on it.
Should I accelerate or defer income?
Do I have investments where tax-loss harvesting makes sense?
Should I set up a Donor-Advised Fund?
Should I be selling certain appreciated securities?
What expenses should I be writing off in my business or side hustle?
Am I maximizing the right retirement accounts?
Should I consider a Roth conversion?
The right answer won't be the same for everyone.
That's why the calendar matters mechanically, not just psychologically.
Many of these moves have real deadlines or require lead time to execute properly. Tax-loss harvesting needs to account for wash-sale rules. A Roth conversion needs to be modeled against your actual income for the year, not a guess. Estimated quarterly payments are due on a fixed schedule, and getting them wrong creates penalties regardless of what your final return eventually shows.
Waiting until the calendar turns doesn't just cost you planning time, it can quietly cost you money.
Two Questions Worth Slowing Down On
Of the seven questions above, two tend to get the most attention, and also the most confusion.
Tax-loss harvesting sounds simple. Sell a losing position, use the loss to offset gains elsewhere, lower your tax bill. In practice, the wash-sale rule trips up more people than almost anything else in the tax code. If you sell a security at a loss and buy a substantially identical one within 30 days before or after, the IRS disallows the loss. I see people harvest a loss in December and casually repurchase the same position in January, not realizing they've just erased the benefit. This is exactly the kind of move that needs coordination between your advisor and your CPA, not something to execute alone the week before year-end.
A Roth conversion is the other one. The idea is straightforward: move money from a traditional IRA into a Roth, pay tax on the conversion now, and let it grow tax-free from there. The execution is where it gets complicated. The right amount to convert depends on your current tax bracket, what bracket you expect to be in later, whether the conversion pushes you into a higher Medicare premium tier, and how much time the money has to grow before you need it. Convert too much in a single year and you can hand yourself a tax bill that outweighs the long-term benefit. This is a decision that should be modeled against your actual numbers, not a general rule of thumb.
Don't Let the Tax Tail Wag the Investment Dog
There's another mistake people make.
They become so obsessed with avoiding taxes that they make bad financial decisions.
I would rather make $100 and pay $25 in taxes than make nothing and proudly announce that I paid zero taxes.
The goal isn't the lowest possible tax bill. The goal is the highest possible after-tax wealth.
That's a very different mindset.
The Key Is Having a Coordinated Team. And This Is Part of Our Member Services at Exit Wealth.
For higher-income families and business owners especially, investment planning, retirement planning, estate planning, and tax planning increasingly overlap.
Your CPA shouldn't discover a major investment transaction when the 1099 arrives.
Your financial advisor shouldn't learn about a business sale after the purchase agreement has been signed.
And you shouldn't be the quarterback running documents between professionals who never talk to each other.
So before another year disappears, ask yourself one question:
Am I paying someone to prepare my taxes, or am I actually planning my taxes?
Because April is when you find out what you owe, or October if you've filed an extension.
Right now is when you may still be able to do something about it.
CFP®, CRPC®, CRPS®, AWMA®, AAMS®, CMFC®, CEPA®
CEO & Managing Partner ยท Exit Wealth®
All opinions expressed in this newsletter are for general informational purposes and constitute the judgment of the author(s) as of the date of the newsletter. The opinions and views expressed by the author are personal and based on economic or market conditions at the time of publication. Actual economic or market events may turn out differently than anticipated. Nothing in this material is intended to serve as personalized investment, tax, or insurance advice. These opinions are subject to change without notice and are not intended to provide specific advice or recommendations for any individual.
The material has been gathered from sources believed to be reliable, however Exit Wealth® cannot guarantee the accuracy or completeness of such information, and certain information presented here may have been condensed or summarized from its original source. To determine which investments may be appropriate for you, consult your financial advisor prior to investing. As always, please remember investing involves risk and possible loss of principal capital and past performance does not guarantee future returns; please seek advice from a licensed professional.
