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5 Tax-Smart Strategies for Your Financial Plan

Estate Planning Taxes

Albert Einstein reportedly once told his accountant, "the hardest thing in the world to understand is income taxes." That sentiment rings just as true today, as the tax landscape has only grown more complex.

While April 15 is the annual tax deadline, tax planning isn’t just a once-a-year obligation—it’s a critical, year-round component of your financial strategy. Whether you're a business professional, a high-income earner, or building generational wealth, understanding how taxes fit into your overall financial plan can help you keep more of what you earn and ensure your financial story unfolds as you envision.

As a fee-only fiduciary financial planner, I help clients in the Greater Iowa City Corridor navigate tax complexities by integrating tax strategies with their broader financial goals. Here are five key insights to keep in mind for this tax season and beyond.

1. Optimize Your Retirement Plan with Tax Efficiency

Retirement planning isn’t just about saving—it’s about strategic tax management over a lifetime. Whether you’re early in your career, a high-income earner maximizing contributions, or preparing for Required Minimum Distributions (RMDs), tax planning plays a major role in your retirement outlook.

  • Maximizing Contributions: Should you prioritize a pre-tax 401(k) or a Roth IRA? Understanding how your current and future tax brackets influence this decision is essential.
  • Deadlines Matter: IRA contributions can be made until the tax filing deadline, while 401(k) contributions must be completed by December 31.
  • RMD Strategies: Recent changes in RMD rules make proactive planning crucial, especially for high-net-worth individuals managing large retirement accounts.

A customized tax strategy ensures you aren’t leaving money on the table when it comes to retirement savings and withdrawals.

2. Leverage Tax-Advantaged Strategies

Beyond traditional retirement accounts, high-income earners and business professionals have powerful tax strategies at their disposal:

  • Health Savings Accounts (HSAs): A triple tax-advantaged tool offering tax-deductible contributions, tax-free growth, and tax-free withdrawals for qualified medical expenses.
  • Roth Conversions: Moving funds from a traditional IRA to a Roth IRA can provide long-term tax benefits, especially if you anticipate higher tax rates in retirement.
  • Backdoor Roth IRAs: A strategy for high-income earners who exceed Roth IRA contribution limits—when structured properly, this can provide significant tax-free growth potential.

Not every strategy is right for everyone, so it's important to work with a financial planner who understands how these options align with your overall wealth plan.

3. Plan Your Legacy with Tax Efficiency

For high-net-worth individuals, estate and legacy planning is a critical component of financial success. The current federal estate tax exemption is $13.61 million per individual ($27.22 million for married couples)—but these thresholds could change in the coming years.

Strategic planning ensures that your wealth is preserved, protected, and passed on efficiently, rather than unnecessarily reduced by taxes. Considerations include:

  • Gifting Strategies: Annual gifts up to $18,000 per recipient (2024 limit) can reduce taxable estates over time.
  • Charitable Giving: Donor-Advised Funds and charitable trusts can optimize your tax impact while supporting causes you care about.
  • Trust Planning: Proper structuring of irrevocable or grantor trusts can provide estate tax advantages and protect assets.
     

Legacy planning isn’t just about minimizing taxes—it’s about ensuring your wealth supports your family and your values for generations.

4. Manage Investment Tax Implications

Taxes should be considered with every investment decision—not just at year-end. Strategies such as tax-loss harvesting, capital gains planning, and diversification across tax-efficient accounts can help optimize after-tax returns.

For business owners and professionals, investment-related tax considerations may also include:

  • Equity compensation (RSUs, stock options)
  • Alternative investments (private equity, venture capital, real estate, crypto)
  • Municipal bonds (potential tax-free income for high-income earners)
     

Understanding the tax impact of when and how you sell investments is key to maximizing wealth over time.

5. Stay Flexible in an Uncertain Tax Environment

Tax laws change—frequently. While discussions about extending the Tax Cuts and Jobs Act (TCJA) continue, long-term planning requires flexibility.

High earners and business professionals should take a multi-scenario approach, considering:

  • Potential tax rate increases on income, capital gains, and estates
  • Expiring tax breaks that could impact retirement or estate plans
  • Opportunities to optimize business tax structures in light of changing laws

Year-round tax planning, rather than a last-minute scramble, is key to staying ahead.

Tax Planning as Part of Your Financial Story

Taxes are an integral part of wealth management, but they should never be the sole focus. Your financial plan should reflect your life, values, and long-term vision.

As a CFP®, CIMA®, and RLP®, I take a holistic approach to financial planning using the EVOKE® process—helping you uncover your financial story and align your plan accordingly.

If you want to explore tax strategies tailored to your goals, let’s start a conversation.

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Storybook Financial is a financial planning firm determined to help those that believe in the betterment of the world around them. As a fiduciary, our service promotes unbiased financial planning with an emphasis on young medical professionals and their families. We are constantly pushing for new ways to give back to the Cystic Fibrosis community. We are based out of Iowa City | Coralville Iowa, but we serve clients nationwide with our robust virtual presence. This content is developed from sources believed to be providing accurate information. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security.