You Can Plan Your Taxes Before the Year Ends

A listener named Rachel asked something I haven't been able to stop thinking about.

"How am I supposed to plan around tax brackets when I don't even know my final numbers until it's time to file — and by then it's too late to do anything?"

It's one of those questions that sounds simple but cuts right to the heart of why proactive tax planning feels so hard. And honestly? It's a fair concern.

We're right in the thick of tax season now, which means a lot of people are seeing last year's numbers for the first time and wondering, "Could I have done something differently?"

The answer, more often than not, is yes.

The Part That Trips Most People Up

Most people treat taxes as a once-a-year event. You gather your documents, hand them to your accountant, and find out what you owe. The problem with that approach is that by the time you have the full picture, the year is already over.

It's a little like getting a receipt after a meal and wishing you'd ordered differently. Useful information, just too late to act on.

Tax planning only works when you do it before the year closes. But that requires something most people assume isn't possible: a reasonably accurate income estimate, made months in advance.

Why 90% Confident Is Good Enough

Here's what I've seen work with hundreds of clients over the years. You don't need perfect numbers. You need a solid estimate, built early, with room to fine-tune toward the end of the year.

If you're still working, start with your base salary and factor in any expected bonus. That alone gets you most of the way there.

If you're retired or close to it, think through how you're funding your lifestyle. Are you pulling from a traditional IRA or 401(k)? That counts as taxable income. Collecting a pension or Social Security? That counts too. Selling investments that generated a gain? Add that in. Even the dividends sitting quietly in your brokerage account need a spot in the estimate.

Build your best projection early in the year. Then revisit it in November or December, when you have cleaner, more complete numbers. That's the moment to dial things in — decide whether to do a Roth conversion, harvest a capital loss, or make a charitable gift before December 31st.

One thing that often gets missed in that final review: mutual fund capital gain distributions.

Funds are required to distribute realized gains to shareholders at year-end, and those gains show up on your tax return whether you asked for them or not. It's one of the less-talked-about quirks of owning mutual funds, and it can quietly push your income higher than you planned.

What This Actually Makes Possible

When you know roughly where your income will land, the whole year opens up differently.

You can decide how much to convert to a Roth while staying in a favorable bracket. You can time a large withdrawal to avoid tipping into a higher rate. You can make smarter decisions about which accounts to pull from and when.

More than anything, you stop reacting and start steering. That shift, from playing catch-up to being in control, is where the real value lives.

It's not about getting everything exactly right. It's about having enough visibility to make good decisions before the window closes.

The One Thing to Take Away

Start your income estimate at the beginning of the year, not at the end. Include every source: wages, retirement account withdrawals, Social Security, pensions, dividends, capital gains. Then set a reminder to revisit in late November.

That one habit is the difference between finding opportunities and finding out you missed them.

Thank you for reading!

Last thing – I read every single reply to these emails.

I use these responses to guide my content, so your question might become next week’s deep dive.

Happy retiring,

Josh Rendler, CFP® Founder, Motion Retirement​ Partner, Award-Winning Retirement Firm​