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TAX PLANNING

Tax Planning to Help You Keep More of What You Earn

We help clients reduce unnecessary taxes over their lifetime, understand the tax impact of financial decisions, and avoid preventable surprises at tax time, in coordination with their CPA.

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No AUM fees. No commissions. No asset minimum.

OUR APPROACH TO TAX PLANNING

Two Goals Guide Our Work

Reduce Lifetime Taxes

We look past this year's return to how today's decisions affect what you'll pay over time. Lowering this year's bill isn't always the same as reducing lifetime taxes.

Avoid Tax-Day Surprises

The goal is to have the taxes paid throughout the year closely align with what you ultimately owe, without a large balance due or an unnecessarily large refund. If a tax bill is expected, we want to identify it ahead of time so you can have the cash available to pay it.

Where We Look for Tax-Planning Opportunities

Saving and Retirement Accounts

Where and how you save can matter as much as how much. We help you choose among pretax, Roth, and after-tax options.

  • •  Pretax versus Roth contributions
  • •  Backdoor Roth IRA and mega backdoor Roth
  • •  HSA and 529 plan strategies
  • •  Solo 401(k) for 1099 income

Investments and Equity Compensation

How and when you realize gains affects your tax bill, and equity compensation adds its own rules around vesting and sales.

  • •  Asset location and tax-efficient ETFs
  • •  Tax-aware rebalancing and tax-loss harvesting
  • •  Capital-gain timing and charitable giving
  • •  RSU, ESPP, and stock option decisions

Planning for Retirement

The order you draw from accounts, and when you convert to Roth, can meaningfully change your lifetime tax bill.

  • •  Roth conversions and withdrawal sequencing
  • •  Required minimum distributions (RMDs)
  • •  Social Security taxation and Medicare IRMAA
  • •  Qualified charitable distributions, when relevant

Withholding and Tax Projections

Reviewing prior-year returns, current paystubs, and anticipated income can help identify withholding gaps before tax time. We prepare projections when compensation changes or a major transaction creates a meaningful tax question.

  • •  Prior-year returns and current paystubs
  • •  RSU and bonus withholding
  • •  Impact of compensation changes
  • •  Projections tied to major transactions

Connected to Your Larger Financial Plan

Tax savings are one consideration, not the goal by themselves. Increasing your 401(k) contributions may reduce this year's taxes, but it may not be the right move if you need that money for an upcoming home purchase. Donating appreciated investments can be tax-efficient, but only when charitable giving is already part of your goals. We coordinate tax strategies with your complete financial plan, while your CPA handles tax filing and confirms estimated payments when needed.

COMMON QUESTIONS

Questions about tax planning.

High-income W-2 employees have the most direct impact through pretax contributions to workplace retirement plans and HSAs, which reduce taxable income in the year they're made. Beyond that, strategies like asset location, tax-loss harvesting, charitable giving, and the timing of equity-compensation decisions can improve tax efficiency over time, even though they don't always lower this year's bill. Because W-2 income offers fewer levers than business income, the biggest gains usually come from coordinating these pieces with your investments and overall plan.
Pretax contributions make more sense when your current tax rate is higher than the rate you expect in retirement, since they reduce taxable income now in exchange for taxable withdrawals later. Roth contributions tend to work better in lower-earning years, or when you expect tax rates to rise, since qualified withdrawals are tax-free. Many households benefit from contributing to both over time, shifting the mix as income and tax brackets change, which is worth revisiting as part of your broader plan.
A backdoor Roth IRA is a two-step process: you contribute to a nondeductible traditional IRA, then convert it to a Roth IRA, a strategy used by high earners whose income exceeds the limits for direct Roth contributions. It works cleanly when you have no other pretax IRA balances; if you do, the pro-rata rule can make part of the conversion taxable, which is worth evaluating first. It can be useful for high earners who are ineligible to contribute directly to a Roth IRA and want to add tax-diversified retirement savings.
You can still owe taxes at filing time because paycheck withholding is only an estimate, not a guarantee. It may not fully account for your household's combined income, investment income, or supplemental wages like bonuses and RSUs, which are often withheld at a flat rate that doesn't match your actual marginal tax rate. Reviewing your withholding alongside your complete income picture, ideally before year-end, can help you identify and address a shortfall before it becomes a surprise.
RSUs and bonuses are often subject to federal withholding at a flat 22% rate when supplemental wages for the year do not exceed $1 million (37% on amounts above that threshold). That is only the amount withheld, not necessarily the tax ultimately owed. Because this income is added to your other taxable income, high earners may owe tax at a higher marginal rate, creating a gap between withholding and your actual liability. Reviewing your projected tax bill ahead of a large vesting event or bonus payout can help you plan for that gap and avoid a year-end surprise.
The most reliable ways to reduce taxes on investment gains are holding investments longer than a year to qualify for lower long-term capital gains rates, harvesting losses to offset gains, and being deliberate about which accounts hold which investments, since taxable, tax-deferred, and Roth accounts are taxed differently. Donating appreciated securities and careful timing of when you realize gains can also help. The right combination depends on your income level, other gains and losses, and how it fits your broader portfolio.
Charitable giving reduces taxes primarily through itemized deductions, which only provide a benefit if your total itemized deductions exceed the standard deduction. Donating appreciated securities held for more than one year can be especially efficient because you may avoid capital-gains tax on the appreciation and potentially deduct the fair market value, subject to the applicable deduction limits. Bunching several years of giving into one year, or using a donor-advised fund, can help you clear the itemization threshold in years when it matters most.
Tax preparation is the backward-looking process of accurately reporting what already happened on your return, typically handled by a CPA or enrolled agent. Tax planning is forward-looking: identifying opportunities before year-end to reduce what you'll eventually owe, such as retirement contributions, Roth conversions, or the timing of income and deductions. Novak Financial Partners provides tax planning, projections, and reviews of completed returns for missed opportunities, and we coordinate closely with your CPA, but we do not prepare or file tax returns ourselves.

Novak Financial Partners provides forward-looking tax planning and coordinates with clients' CPAs. We do not prepare or file tax returns, independently advise on estimated tax payments, or replace a CPA. A CPA should confirm maximum Solo 401(k) contributions involving business income. We do not guarantee any tax outcome, and not every strategy discussed applies to every client.

Make Tax Planning Part of Your Financial Plan

Schedule an introductory call to learn how we can help you reduce unnecessary taxes over your lifetime and avoid tax-day surprises.

Schedule a Call

Flat-fee plans from $4,000 per year. No commissions. No asset minimum. Serving clients nationwide by video.