Tax planning- What you need to know about planning your taxes

Tax planning is an important aspect of personal financial management that can save you a great deal of money. Here's a quick guide on what tax planning is, when and how to get started.

Morgan Chrystal


Morgan Chrystal is a certified public accountant at Ursula Serluca, CPA, a small public accounting practice located in Purchase, NY that primarily serves small – medium sized businesses and individuals. Previously, she worked as a tax consultant in the private equity sector at Deloitte. Morgan holds a master’s degree in accounting from New York University and a dual Bachelor’s degree in finance and computer science from Iona College. She recently passed the CFP exam and is working towards earning the full credential. Morgan is passionate about personal finance and helping to make accounting and finance matters less daunting for her clients!

Tax planning is one of the most under-appreciated services of personal financial management. Most people think of budgeting, saving, and investing as part of their healthy financial management process. However, tax planning, something that wealthy individuals think about A LOT, is crucial to saving thousands, if not millions, during your life.

So what is tax planning?

Tax planning is a broad term that encompasses everything from opening an HSA to maxing out retirement accounts for self-employed earners. Everyone, no matter how much you make, should be thinking about ways to optimize tax deductions and reduce taxable income.

Tax planning is especially important for self-employed earners since this group has the most flexibility and tax strategies available to them. For example, different retirement plans allow a business owner to avoid taxes at an individual and a business level (consult your accountant to see which retirement plan makes the most sense for you as the wrong decision can cost you 30% of your income down the line).

How to start with tax planning?

The first thing to consider as part of tax planning is your goals. Is your main goal to save for a house right now? Or to reduce taxes in retirement? Next, consider your current and projected cash flows from your job and investments. It's important to know what your discretionary income will be after major expenses since tax deductions often involve you spending cash. For example, an HSA or IRA contribution is tax-deductible, but you still need to move cash from your income into the account. Finally, you should consider how your tax expense will grow as you become more successful with your career. Understanding this will help you decide what strategies to pursue to optimize, defer or shelter your tax liability. Fortunately, as your wealth and income sources grow, so do the tax strategies available to you!

When should I think about tax planning and work with a professional?

Good times to think about tax planning are:

  1. When you have a kid
  2. You have excess cash that can be used to offset other taxable income sources (i.e. investing in an asset class like real-estate that can potentially let you deduct taxable gains)
  3. You start collecting income from more than one source
  4. Retirement is on the horizon
  5. Any major financial or life milestone

If you fall into one of these camps and need help finding a professional, please fill out this survey form and we'll help you find a tax professional.

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Disclaimer: This post is informational only and is not intended as tax advice. For tax advice, please consult your tax professional. If you're looking to work with an accountant and need help finding someone, leave your information here, we'll connect you!

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