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Tax planning
Preparation reports the year you had; planning is the work done between September and December 31, while the numbers on next April's return can still move.
Preparation is a report. Planning is a decision, and almost every decision that lowers a tax bill has to be made before December 31. By the time I am looking at your W-2s, K-1s, and 1099s in March, the year is closed and I am recording what you already did.
This work is for people with moving parts. A practice with real net profit. K-1 income from a group. Two high incomes in one household and withholding that was never set up for two. A year holding one large event: a partnership buy-in, a building purchase, a sale, a move across state lines. If your return is one W-2 and the standard deduction, there is almost nothing to plan, and selling you a meeting about it would be selling you nothing.
What can still be changed after December 31
The list is short, so here it is in full. Traditional and Roth IRA contributions count for the prior year up to the April filing deadline. HSA contributions, same deadline. A SEP-IRA can be funded as late as the extended due date of the return. One more is recent enough that plenty of people still plan around the old rule: a sole proprietor with no employees can adopt a solo 401(k) after the year closes and still make prior-year employee deferrals in the plan's first year, up to the unextended due date of the return. A missed S-corporation election can sometimes be repaired under the IRS late-election relief procedure, which carries a deadline of its own and requires that the facts support the election you meant to make.
That is close to everything. The income you recognized, the equipment you placed in service, the plan your business did or did not put in place for its staff, the salary you ran through payroll, the state where you created a filing obligation: all of it settled on December 31 and cannot be re-argued in April. Preparation finds the deductions you already earned. Planning is where you earn more of them.
The levers, and when each one closes
Planning is not a philosophy. It is a set of dated decisions. These are the ones that come up most often in my practice. Dollar thresholds move every year, so I check each against current IRS guidance before telling you what a move is worth.
- Entity election. Form 2553 generally has to be filed in the first two and a half months of the tax year it applies to, so an S-corp for next year gets decided next winter, not next April
- Retirement plan selection. A 401(k) that covers employees has to exist by December 31 to accept deferrals for that year. A sole proprietor with no staff gets more room than that: a solo 401(k) can be adopted after year end and still take prior-year employee deferrals in its first plan year, up to the unextended due date of the return, with the employer contribution due later still. A SEP-IRA can be opened and funded as late as the extended due date. Which one fits depends on your payroll, not on preference
- The 403(b) and 457(b) stack. Employed hospital and academic physicians can often defer into both. A governmental 457(b) is a real retirement account; a non-governmental one is an unsecured claim against your employer's general creditors, which makes it a decision rather than a formality
- Owner compensation. The salary and distribution split on an S-corporation has to run through payroll during the year, not get assigned in hindsight. Once wages clear the Social Security wage base, the only payroll tax left at the margin is the Medicare piece, which changes the math on the split
- Placing assets in service. Section 179 and bonus depreciation turn on the date equipment is placed in service, not the date you ordered it or paid for it
- QBI positioning. Section 199A treats health as a specified service trade or business and specifically carves engineering out of that definition. Inside the phase-in range, income timing and W-2 wages paid move the deduction by real money
- Pass-through entity tax elections. Most states with a PTET set a hard annual election deadline. For a partner receiving a K-1 in a state with meaningful income tax, a missed election is a measurable loss with no remedy
- Timing across the year boundary. Deferring a December bonus or a final invoice into January, pulling a January expense into December, bunching two years of charitable gifts into one: each is worth doing only when you know which side of a threshold each year lands on
- Estimated payments and withholding. The underpayment penalty is computed period by period, so a large April payment does not cure a missed September 15 one
One mechanic worth knowing on its own: W-2 withholding is treated as paid evenly across the year no matter when it was actually withheld. A December W-4 change, or extra withholding on a Q4 bonus, can retroactively cure an underpayment from March. A January estimated payment cannot. That difference alone is why the December conversation earns its place.
Why September through December is the real season
April gets the attention and it is the wrong month to organize a year around. By April the only open questions are clerical. The useful window opens once the year holds enough data to project honestly, and it shuts on December 31.
By late September I can see most of a year. Whether the practice performed against its January budget. Whether the RVU bonus is landing higher than the group planned for. Whether the contract engagement that was supposed to run six months is now running twelve and picked up two more states along the way. That is enough to build a projection worth acting on, with roughly three months left to act. The September 15 estimate is already paid and the January 15 one is not, and everything structural is still open. How this plays out for employed physicians, private practice owners, and group partners is on the medical page.
How this actually runs
Baseline
I start from your last filed return and your current-year numbers to date. The prior return shows what your structure produces in a normal year. The current numbers show what changed.
Projection
I build out the rest of the year, including what has not happened yet: the Q4 bonus, the year-end distribution, the equipment you are weighing, the property you might sell, the partner draw that lands in December.
Decisions with dates
You get a written list of the moves worth making, what each is worth in dollars, and the date each one stops being available. Some lines will read do nothing, with the reason attached.
December confirmation
I check what actually got done before the year closes, then reset the January 15 estimate to the real number instead of the September guess.
What planning does not do
It does not make a large tax bill small. A high income in a state that taxes income produces a large tax bill, and any page suggesting otherwise is selling something. What planning changes is the gap between paying the correct amount and paying more than the correct amount, plus penalties and daily-compounding interest, because decisions got made in the wrong order.
I do not manage investments and I do not sell insurance or annuities, so no product is waiting at the end of this conversation. When a move needs a lawyer, an operating agreement amendment or an estate document, I will say so and work with yours. Entity structure and ownership questions that run past the tax math sit on the business advisory page.
What it costs
A flat fee, quoted in writing before I start, set by the same complexity scoring I use for every engagement. The inputs are countable: entities involved, states in play, number of income sources, whether K-1s are in the picture, whether prior years need cleanup first. Same inputs, same price, whatever I happen to think the answer is worth to you. The mechanics are on the pricing page. The first conversation costs nothing, and if the honest answer is that you do not need this yet, that is the answer you get.
I came over to Nottingham after being with another CPA for many years. The transition was very smooth, and I love the personal attention I get from Hunter.
Starting
Tell me what your year looks like through the contact form. Rough numbers are fine; I am looking for shape, not precision. If the timing is wrong, I will tell you when to come back rather than book something now.
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Further reading
Questions, answered plainly.
When in the year should we start?
July through early November is comfortable. After Thanksgiving the list of available moves gets shorter every week, and by the third week of December several of them are gone. If you are reading this in February, the useful thing to do is get the current return prepared correctly and put a September conversation on the calendar.
I am a W-2 employee with no side income. Is there anything here for me?
Less than the internet implies. An employee generally cannot deduct unreimbursed job expenses on a federal return. The exceptions are narrow and probably not you: Armed Forces reservists traveling more than 100 miles, qualified performing artists, fee-basis state or local government officials, and impairment-related work expenses. So CME, board and license fees, society dues, and equipment do not go on Schedule A, and opening a Schedule C to run them through is a fabricated business rather than a strategy. What remains is real but short: retirement plan selection, withholding accuracy, HSA use, charitable timing, and the treatment of any large one-time event. A few states still allow the employee expense deduction on the state return, which is worth checking against yours. For most W-2-only households this is one conversation, not a recurring engagement, and billing for quarterly meetings you do not need is not work I want.
Do you have to prepare my return to do the planning?
No, though it works better when I do, because the plan and the return get reconciled by the same person and nothing is lost in the handoff. If you are keeping your current preparer, I will write the plan so they can execute it and be explicit about which items depend on them. What I will not do is give you advice I have no way to verify was carried out.
It is already December. Is it too late?
Not for everything. Contributions to a plan that already exists, the placed-in-service date on equipment, charitable gifts, a Roth conversion, harvesting capital losses, and the withholding adjustment described above are all live until December 31. If you are a sole proprietor with no employees, a first-year solo 401(k) is still reachable after the year closes. What is gone is an entity election, a plan that has to cover staff, or twelve months of payroll that needed to run correctly the first time. December is a smaller conversation than September. It is not a wasted one.
The first conversation is free.
Tell me what's going on and I'll tell you plainly whether you need me.
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