The beginning of the year is one of the most powerful times to get ahead on taxes. Waiting until filing season limits your options. Acting now gives you time to structure income, expenses, entities, and investments in a way that actually saves money.

Proactive tax planning is not about last-minute deductions. It is about making intentional decisions early, when you still have time and control.

See how proactive tax planning helps business owners legally save thousands each year.

1. Review Last Year’s Tax Return for Missed Opportunities

Before you plan ahead, you need to look back. Your prior-year return tells a story.

Key items to review

• Entity type and income mix

• Schedule C vs Schedule E classification

• Depreciation methods used

• Retirement contributions made or missed

• Credits not claimed

This review often reveals easy wins that can be fixed early in the year instead of scrambling later.

2. Optimize Your Entity Structure Early

Entity changes and choosing the right entity are most effective when done at the beginning of the year.

Common optimization opportunities:

• Switching from Schedule C to an S-Corporation

• Separating real estate from operating businesses

• Adding payroll for reasonable compensation

• Cleaning up multi-entity ownership and compliance

Waiting too long can reduce or eliminate tax savings for the year.

3. Plan for Depreciation and Cost Segregation

If you own rental real estate or plan to acquire property this year, depreciation planning matters now, not later.

Early planning allows you to

• Time purchases strategically

• Determine whether cost segregation makes sense

• Align depreciation with income spikes

• Coordinate with Real Estate Professional Status

When done correctly, depreciation planning can create substantial tax deferral or permanent tax savings.

For official IRS rules on depreciation, business deductions, and real estate property treatment, see the IRS Tax Guide for Small Business (Publication 334):  

4. Set Up Retirement and Health Strategies

Many high-income taxpayers miss tax savings simply because accounts were not set up in time.

Common strategies that require early action

• Solo 401(k) and defined benefit plans

• Health Reimbursement Arrangements (HRAs)

• Backdoor Roth planning

• Employer-sponsored benefits for business owners

Early setup provides flexibility while maintaining IRS compliance.

5. Build a Tax Calendar for the Year

Proactive tax planning is not one meeting. It is a system.

A strong tax calendar includes

• Quarterly estimated tax payments

• Payroll and withholding deadlines

• Entity compliance and filing dates

• Strategic tax review checkpoints

This structure keeps you proactive instead of being reactive.

Discover how smart year-end tax moves could save real estate investors thousands and get a sneak peek at what TaxMD™ can do.

Frequently Asked Questions

When should tax planning for the year actually start?

Tax planning should begin as early as possible, ideally in the first quarter. The earlier decisions are made, the more strategies are available.

Is tax planning only for business owners and real estate investors?

No. High-income W2 earners, investors, and retirees can also benefit from proactive tax planning, especially around retirement, capital gains, and investment income.

Can I still save taxes if I already missed the start of the year

Yes, but options may be more limited. Some strategies work retroactively, while others require early setup to be effective.

How often should I review my tax strategy

At least quarterly. Major life events, income changes, and new investments often require strategy adjustments.

Learn more, how proactive tax planning works in real life through our case study showing how we saved an account executive $55,000 on a $300,000 income.

Need Help Creating a Proactive Tax Plan?

At INVESTOR FRIENDLY CPA®, we provide personalized guidance to help you build tax-efficient systems, optimize entities, and avoid costly mistakes before they happen. Our proactive approach ensures your tax strategy supports your long-term goals, not just compliance.

Our Services Include

• Comprehensive tax planning and strategy reviews

• Entity structuring and optimization

• Real estate-focused tax strategies and depreciation planning

• Payroll setup for business owners, spouses, and children

• Retirement and health benefit strategy implementation

• Long-term wealth and compliance planning

Call Us Today at (800) 522-6091 or Schedule Your FREE Consultation.
Let’s take the first step toward smarter tax planning and a stronger financial foundation with INVESTOR FRIENDLY CPA®.