🔥 STEP 4be — TAX PLANNING

How Wealth Builders Strategically Lower Taxes All Year Long

🌟 INTRODUCTION — You Don’t Lower Taxes at Tax Time… You Lower Them All Year

Most people think tax season is:

Filling out forms
Hoping for a refund
Worrying if they owe
Stressing about receipts
Trying to “fix things” in April

That is NOT tax planning.

That is tax filing, and filing is reactive.

Wealthy people do NOT “file taxes.”

Wealthy people PLAN taxes.

Tax planning means:

Reducing your tax burden intentionally
Strategically shaping your income
Scheduling your deductions
Timing your financial moves
Positioning your accounts
Structuring your business
Reducing AGI
Lowering your bracket
Controlling your liability
Optimizing for credits
Minimizing taxable events
Designing your financial year

Tax planning is the difference between:

❌ Hoping for good news
and
✔ Designing good news

And that starts now.

🧭 SECTION 1 — THE DIFFERENCE BETWEEN TAX FILING & TAX PLANNING

Most people get this wrong:

🔹 TAX FILING = Reporting the past

🔹 TAX PLANNING = Shaping the future

Filing is what your accountant does once a year.
Planning is what YOU do all year.

Tax planning asks:

What should I do BEFORE December 31?
What should I avoid this year?
What can I restructure?
How can I reduce taxable income?
How can I increase deductions?
How can I legally pay the minimum required?
How can I position myself for next year?
How do I plan a multi-year tax strategy?

When you think like this, your tax system transforms forever.

📘 SECTION 2 — WHY TAX PLANNING IS ONE OF THE HIGHEST-ROI FINANCIAL SKILLS

A single tax planning decision (like starting a home business, contributing to a retirement account, or structuring as an S-corp) can:

Lower your taxes
Increase your cash flow
Increase your investments
Accelerate your retirement
Expand opportunities
Reduce financial stress

Every dollar you save in taxes is:

Risk-free
Guaranteed
Instant
And can be reinvested

This is one of the only guaranteed-return strategies in finance.

For example:

Saving $4,000 per year in taxes
Invested annually at 11%
= $913,000 in 30 years.

Tax planning is wealth building.

🧩 SECTION 3 — KEY AREAS OF TAX PLANNING

There are 7 major areas where tax planning happens:

1️⃣ Income planning

2️⃣ Deduction timing

3️⃣ Credit optimization

4️⃣ Investment taxation

5️⃣ Business tax planning

6️⃣ Retirement optimization

7️⃣ Long-term strategy planning

We’re going to master each one.

🏦 SECTION 4 — INCOME PLANNING

Income planning means shaping when, how, and where your income appears.

Important questions:

Do you have W-2 income?
Do you have 1099 income?
Do you have business income?
Do you have dividends?
Do you have capital gains?
Do you have rental property?

Income planning helps you:

Stay in lower tax brackets
Avoid phase-outs of credits
Time your income for maximum benefit
Avoid unnecessary taxes

✔ Strategy Example: Delay Income

If you’re close to a bracket threshold, you may delay invoice payments to January (legal and common).

✔ Strategy Example: Shift Income

Move income to business where you have more deductions.

✔ Strategy Example: Earn more passive income

Passive income is taxed MORE favorably than active income.

Income planning = keeping more.

💵 SECTION 5 — DEDUCTION TIMING: THE CALENDAR-BASED SECRET THE WEALTHY USE

Deductions are most powerful when strategically timed.

You can:

Accelerate deductions
Defer deductions
Bunch deductions
Time purchases
Time charitable contributions
Time business expenses
Time retirement contributions

Examples:

✔ “Bunching Strategy”

You alternate between standard deduction one year and itemizing the next year depending on when you time deductions.

✔ Example:

Instead of donating $5,000 every year…
Donate $10,000 every two years → itemize that year → take standard deduction the next.

✔ Timing Business Purchases

Buy equipment in December → deduct now.
Buy in January → deduct next year.

✔ Timing Repairs

Smart business owners and landlords strategically schedule repairs to maximize deduction timing.

Wealthy people don’t guess.
They plan.

🧾 SECTION 6 — CREDIT OPTIMIZATION

Credits reduce your tax bill, not taxable income.

Credits are extremely valuable.

Examples:

Child tax credit
EV credits
Solar panel credit (30%)
American Opportunity & Lifetime Learning credits
Earned Income Tax Credit
Adoption credit
Premium tax credits (healthcare)

Tax planning looks at:

Which credits you qualify for
Whether your income may disqualify you
How to manage your AGI to stay eligible

Credits require proactive planning.

📉 SECTION 7 — INVESTMENT TAX PLANNING (STOCKS, FUNDS, CRYPTO)

Investment tax planning includes:

✔ Short-term vs long-term capital gains

Long-term = much lower tax.

✔ Tax-loss harvesting

Sell losing investments to offset gains.

✔ Tax-efficient investing

Choose funds designed to minimize taxable distributions.

✔ Asset location

Put heavily-taxed assets into tax-advantaged accounts.

✔ Dividends

Reinvest or strategically position them.

✔ Crypto gains/losses

Keep clean records and time sells intelligently.

Good planning can save you thousands every year.

💼 SECTION 8 — BUSINESS TAX PLANNING

THIS IS WHERE WE GREATLY EXPAND.

Business owners have the biggest tax planning opportunities in the entire tax code.

Tax planning includes:

Choosing your entity structure (LLC, sole prop, S-corp)
Maximizing business deductions (Step 4bc)
Planning depreciation schedules
Tracking mileage
Timing equipment purchases
Setting up a retirement plan (SEP IRA, Solo 401k)
Paying your children legally
Shifting income within family
Using home office strategically
Splitting income between spouses (if applicable)
Hiring contractors vs employees
Deducting business travel
Charitable giving from business
Year-end clean-up

Business owners can often legally reduce taxes 20–50%.

This is where tax planning becomes extremely powerful.

🧮 SECTION 9 — S-CORP OPTIMIZATION (Advanced Planning)

An S-corp allows you to:

✔ Pay yourself a “reasonable salary”

(taxed as payroll/W-2)

✔ Take additional income as “distribution”

(not subject to self-employment tax)

This saves many business owners:

👉 $6,000–$18,000 per year
correctly structured.

Tax planning must include:

Setting salary
Running payroll
Documenting distributions
Timing distributions
Avoiding red flags

This requires CPA involvement but is extremely valuable.

🛡️ SECTION 10 — RETIREMENT TAX PLANNING

Planning which accounts you contribute to changes your tax outcome dramatically.

You can:

Reduce taxable income today (Traditional)
Build tax-free future wealth (Roth)
Lower AGI (HSA contributions)
Use self-employed retirement plans

Major tax planning vehicles:

Traditional IRA
Roth IRA
401(k)
Roth 401(k)
SEP IRA
SIMPLE IRA
Solo 401(k)
HSA

Strategic decisions include:

Which account to max first
How much to put where
Whether to prioritize Roth vs Traditional
Income limitations
Timing
Multi-year planning

This is a BIG part of tax planning that impacts your future.

🧠 SECTION 11 — MULTI-YEAR TAX STRATEGY (ADVANCED)

Tax planning isn’t just “year by year.”

It’s 3–5 year planning, which considers:

Future raises
Future income drops
Starting or selling a business
Buying real estate
Selling real estate
Having children
Marriage
Divorce
Inheritance
Moving to a different state
Preparing for retirement
Roth conversion strategies
Using 0% capital gains years

The wealthy plan across decades.

📅 SECTION 12 — QUARTERLY TAX PLANNING (SELF-EMPLOYED ESSENTIAL)

Self-employed people MUST plan quarterly.

Quarterly planning includes:

Estimating income
Estimating expenses
Making quarterly tax payments
Adjusting based on new business information
Planning purchases
Maximizing deductions before each quarter ends

Quarterly planning prevents:

IRS penalties
Big year-end surprises
Stress
Overpayment

Quarterly planning = business discipline.

🧾 SECTION 13 — HOW TO PERFORM A YEAR-END TAX REVIEW

This is what wealthy people do in October–December:

✔ Review taxable income projections

✔ Check deduction opportunities

✔ Max contributions to retirement accounts

✔ Max HSA contributions

✔ Analyze potential capital gains

✔ Harvest losses

✔ Pre-pay certain expenses

✔ Delay or accelerate income

✔ Review real estate strategy

✔ Check business deductions

✔ Ensure all documentation is solid

THIS is how people save thousands in the final months of the year.

📊 SECTION 14 — YOUR PERSONAL ANNUAL TAX PLANNING SYSTEM

Here is your simple 12-month plan:

🟩 January–March

Track expenses
Organize receipts
Check withholding
Plan retirement contributions
Organize business finances

🟦 April–June

Review AGI
Check tax bracket trajectory
Adjust income/deductions
Set up retirement plan for business
Quarterly payment (if needed)

🟨 July–September

Review mid-year tax health
Adjust income strategy
Make business purchases (if needed)
Evaluate real estate moves

🟥 October–December

Major tax moves
Max retirement contributions
Time deductions
Tax-loss harvesting
Year-end clean-up
Delay or accelerate income
CPA strategy session
Final quarterly tax payment

THIS is tax planning.

📚 CASE STUDY — Jessica Saves $12,700 With Simple Planning

Jessica:

W-2 employee
Part-time Etsy business
Small rental property
Married, 2 kids
AGI = $96,000

Before tax planning:

Paid high taxes
Missed retirement contributions
Did not track business expenses
Did not time deductions
Did not manage AGI

After planning:

Contributed $6,500 to Traditional IRA
Contributed $2,000 to HSA
Contributed $4,000 to husband’s IRA
Adjusted withholding
Deducted home office
Deducted Etsy supplies
Harvested stock losses
Adjusted timing of income from Etsy

Taxable income dropped by $17,500.
Total tax savings → $12,700.

This is why tax planning matters.

🎯 SECTION 15 — YOUR ACTION PLAN FOR STEP 4be

✔ Identify your income types

✔ Map out your tax bracket

✔ Increase above-the-line deductions

✔ Start or optimize a business

✔ Plan pay schedule or invoices

✔ Maximize retirement contributions

✔ Plan charitable contributions

✔ Build a quarterly planning habit

✔ Perform year-end review annually

✔ Document everything

✔ Prepare for more advanced strategies in Step 4bf

🧾 SECTION 16 — STEP 4be CHECKLIST

You now understand:

✔ The difference between filing and planning

✔ How to reduce taxes intentionally

✔ How to time deductions

✔ How to maximize credits

✔ How to plan investment taxes

✔ How to structure business income

✔ How to use retirement planning strategically

✔ How quarterly tax planning works

✔ How year-end planning works

✔ How multi-year tax planning builds wealth

✔ How to prepare for the advanced tax strategies next

🚀 CONCLUSION — Tax Planning Is Where You Shift From “Taxpayer” to “Strategic Wealth Builder”

This lesson transforms your tax life.