Most tax savings do not happen in April. They happen in the planning you do the other eleven months: which accounts you fund, when you convert, how you time a sale, and how you give. By the time your return is in front of a preparer, most of the year's decisions have already been made.
Here are five moves worth bringing to your financial advisor and CPA before the calendar runs out, not after.
1. The HSA's "Triple Tax Advantage"
If you have a high-deductible health plan, a Health Savings Account is one of the few accounts in the tax code that is deductible going in, grows tax-free, and comes out tax-free for qualified medical expenses. Most people treat it like a checking account for this year's doctor visits. Used differently, invested and left alone, it becomes a stealth retirement account, since after age 65 it can be withdrawn for any purpose and simply taxed like a traditional IRA.
2. The Backdoor Roth
Direct Roth IRA contributions phase out at higher incomes. A backdoor Roth, contributing to a traditional IRA with after-tax dollars and then converting it, is a legal workaround that lets high earners still get money into a Roth. It has to be done carefully, particularly if you already hold other pre-tax IRA balances, so this is one to model with your advisor before you act, not after.
3. Asset Location, Not Just Asset Allocation
Allocation is what you own: stocks, bonds, the mix. Location is where you hold it: taxable, tax-deferred, or tax-free. Two people can own the identical portfolio and end up with very different after-tax wealth, purely based on which investments sit in which account. Tax-inefficient holdings generally belong in tax-deferred accounts; tax-efficient ones can sit comfortably in taxable accounts. It is one of the most overlooked, no-cost improvements in a portfolio.
4. Tax-Loss Harvesting
In a taxable account, a position that is down is not just a loss, it is a future tax deduction waiting to be claimed. Selling it and replacing it with a similar, non-identical investment can offset gains elsewhere in your portfolio, or up to $3,000 of ordinary income per year, with any excess carried forward. This is a use-it-or-plan-for-it strategy, best reviewed before year end.
5. Charitable Bunching Through a Donor-Advised Fund
Since the standard deduction rose, many consistent, smaller-dollar donors no longer clear the itemization threshold in any given year. Bunching, contributing two or three years of planned giving into a donor-advised fund in a single year, can push you over that threshold and unlock the deduction, while the fund still pays out to your chosen charities on your normal timeline.
Bring This to Your Advisor, Not Just Your Preparer
None of these five moves are complicated once you know they exist. What is complicated is knowing which ones actually fit your income, your accounts, and your timeline, and doing them before December 31st instead of discovering them in April. That is planning work, not filing work.
We do not prepare tax returns or give tax advice. What we do is build the strategy your CPA executes against, coordinated with the rest of your financial picture: income, protection, investments, and legacy.
Schedule a complimentary planning review to see which of these fit your situation this year.
This article is for general educational purposes only and is not personalized tax, legal, or investment advice. Essential Trust Financial does not provide tax or legal advice. Please consult your own tax advisor and attorney regarding your specific situation.