There are two very different experiences of tax return season. One is stress, caused by the fear of surprises. If you’re not sure where your tax liability will fall, you submit your documents to your CPA and hope for good news.
The other version of this–one we emphasize with our clients–is that filing your taxes should be little more than data entry on numbers you already anticipate. We make every significant financial decision throughout the year with an eye toward tax season.
From executive compensation packages to investment gains and large portfolio withdrawals, here are a few of the key items our team looks at to avoid tax surprises.
1. Understanding the Tax Impact of Executive Compensation
Many of our clients receive compensation beyond their base salary, such as:
Stock options (ISOs & NSOs)
Restricted stock units (RSUs)
Performance-based incentives
Deferred compensation plans
Each of these has unique tax implications. For example:
RSUs are taxed as ordinary income when they vest, which can push you into a higher tax bracket.
Incentive stock options (ISOs) can qualify for lower capital gains rates but might trigger Alternative Minimum Tax (AMT) if exercised incorrectly.
Non-qualified stock options (NSOs) result in taxable income at the time of exercise, creating immediate tax obligations.
With our specialization in executives, we frequently review clients’ compensation packages for vesting schedules, coming compensation, and other factors so we can plan your income from each pocket accordingly. The more tax efficiency we can build into your cash flow, the better.
2. Strategic Portfolio Withdrawals
Large purchases—whether funding a second home, paying for college, or buying a luxury item—often include liquidating assets. We don’t want to do these with a blind eye toward taxes though.
Withdrawing from the right accounts: This is table stakes. Use taxable brokerage accounts. Only in emergencies do we consider tax-deferred accounts (like IRAs or 401(k)s).
Tax loss harvesting: Should we sell some assets at a loss to offset gains we are creating?
Capital gains planning: Timing sales strategically over multiple years can help stay within lower tax brackets for long-term capital gains.
I remember a conversation I had with someone who held Tesla stock during its initial skyrocketing. For personal reasons, they liquidated a large amount in their portfolio, not realizing they were 2 months shy of reaching long-term capital gains. The tax consequence was well into 6 figures.
If we want to avoid surprises in April, we need a thoughtful view of these big decisions year-round.
3. Surplus Income Years
There are years when your taxable income peaks. Maybe you sold a business. Maybe you received an inheritance. Maybe you got a significant bonus. Whatever the cause, these are years when we want to defer as much income as possible.
A few strategies include:
Maximizing retirement contributions (401(k), HSA, or deferred comp plans) to lower taxable income.
Using charitable giving strategies, such as donor-advised funds (DAFs), to offset taxes while supporting causes you care about.
Buying depreciable assets within a business.
At the end of the day, it’s not about what you make. It’s what you keep. Structuring your high-income events is, first and foremos,t a tax conversation.
4. Planning for Estimated Taxes & Avoiding Penalties
Many high-income earners don’t have enough withheld from their paychecks to cover tax liabilities, leading to surprise tax bills or penalties.
Quarterly estimated tax payments: We help clients calculate and pay taxes throughout the year to avoid IRS penalties.
Adjusting withholdings: Reviewing W-4 elections annually ensures enough is withheld based on bonuses, RSU vesting, and other income.
Proactive tax payments prevent an unexpected April tax bill.
5. High Level Planning Decisions
Financial advisors don’t just look at investments—we help clients view every major financial decision through a tax-conscious lens.
Examples include:
Real estate transactions – Understanding tax-efficient financing, capital gains exclusions, and depreciation benefits.
Estate planning – Structuring gifts and inheritances to minimize estate taxes.
Business income strategies – Maximizing deductions, entity structuring, and pass-through income optimization.
Final Thoughts: Stay Ahead, Stay Prepared
There’s a lot to think on here, but the final thought I’d like to leave you with is this: tax planning doesn’t happen in April with a CPA. It happens throughout the year with your financial team, made up of your financial advisor and your CPA.
Both of those roles need to have deep experience in your needed areas, be that executive compensation, business ownership, or any other complicating layers.
Our team has spent 25+ years serving clients in these areas, and we are here to help you proactively manage your financial world–both for tax season and for a life well lived.