Introduction
High earners face layered tax risks: higher marginal tax brackets, phaseouts, the Net Investment Income Tax (NIIT), and limits such as the SALT cap. A disciplined, year‑round process turns uncertainty into predictable outcomes. This checklist organizes practical tasks by frequency (monthly, quarterly, year‑end) and by objective (cash‑flow planning, tax‑efficient investing, charitable giving, and business owner steps). In my practice as a financial planner advising high‑income households, clients who follow a simple calendar and review a quarterly projection reduce surprises and avoid underpayment penalties.
Quarterly and Ongoing Actions (Keep these on your calendar)
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Project income and tax liability quarterly: Review year‑to‑date income, bonuses, capital gains, and partnership K‑1s. Run a tax projection—either with your CPA or using reliable software—so you can adjust withholding or estimated payments before each quarter’s deadline. For a detailed walkthrough of calculating estimated payments, see our guide on How to Calculate Your Estimated Tax Payments for the Year.
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Monitor withholding and make estimated payments: High earners who receive bonuses, equity compensation, or business profit often need to supplement withholding with quarterly estimated payments to avoid the underpayment penalty. Use the IRS safe‑harbor rules (paying 100%–110% of prior year tax or 90% of current year) as a guide and consult IRS Form 1040‑ES resources for payment details (IRS.gov).
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Track realized and unrealized capital gains: Maintain a running ledger of trades, dividends, and basis. When taxable gains look likely, consider tax‑loss harvesting to offset gains and limit short‑term exposure. In practice, tax‑loss harvesting can materially cut a client’s annual tax bill when done before year‑end rebalancing.
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Keep records and receipts organized: Use digital tools to capture business expenses, charitable receipts, and medical costs. Good recordkeeping saves time and preserves deductions if audited.
Monthly Actions
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Reconcile cash flow and plan for estimated tax cash needs: Allocate funds for quarterly taxes and for large anticipated tax events (stock sales, option exercises). If you expect a cash crunch after a year‑end bonus, plan withholding or estimated payments ahead of time.
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Review employer benefit elections and salary deferral levels: During open enrollment or when you get a raise, increase SIMPLE/401(k) deferrals where possible. Don’t assume contributions automatically change; confirm elections to maximize pre‑tax deferrals.
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Check investment cost basis and lot accounting settings: Ensure your broker uses the tax‑lot method (e.g., Specific ID) that best supports tax planning.
Year‑End and Pre‑Tax‑Season (September–December)
This window is the most powerful for high earners because it lets you lock in tax outcomes before the calendar year closes.
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Run a year‑end tax projection by October: Update projected income, realize gains or losses intentionally, and estimate the effect of stock option exercises and restricted stock vesting. I recommend a firm projection in early October so you have time to implement harvesting or accelerate/delay income.
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Bunch itemized deductions when beneficial: If you hover around the standard deduction threshold, consider bunching charitable gifts or deductible medical expenses into a single year. Read our piece on Bunching Strategies to Maximize Charitable Deductions for timing techniques and examples.
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Use donor‑advised funds (DAFs) for flexible giving: A DAF lets you claim a deduction in the year you fund the account while distributing grants in later years—useful for bunching and estate planning. See our guide on Donor‑Advised Funds (DAFs) for setup and reporting best practices.
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Tax‑loss harvesting and gain management: Identify losing positions to harvest and offset gains. Also, consider realizing small, long‑term gains in a low income year if you expect to stay under higher thresholds.
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Review retirement contribution limits and opportunities: Confirm employer plan deferral levels and whether a backdoor Roth or mega‑backdoor Roth is feasible for non‑Roth contributions. Because limits and rules change yearly, check current IRS guidance or work with your advisor before executing conversions.
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Consider Roth conversion windows selectively: For those in a temporarily lower marginal bracket, partial Roth conversions may make sense. Model the impact on phaseouts, AMT triggers, and ACA subsidy eligibility before converting large sums.
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Evaluate charitable strategies: Beyond DAFs, high earners may consider QCDs (from IRAs, if eligible), private foundations, or a family foundation for long‑term philanthropic control. Each has different tax, cost, and reporting consequences.
Important Annual Milestones (January–April)
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Document all charitable receipts and tax documents early: For recordkeeping and accountant handoff, gather donation acknowledgments, brokerage year‑end tax statements, K‑1s, and mortgage/real‑estate closing documents.
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File early when possible: Filing early reduces identity‑theft exposure, speeds refunds, and gives more time to handle IRS notices.
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Finalize prior‑year retirement and HSA contributions: Make last‑minute IRA and HSA contributions if you’re eligible and need to reduce taxable income for the prior year (check IRS deadlines).
Planning for Specific High‑Income Tax Issues
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Net Investment Income Tax (NIIT) and additional Medicare tax: High earners may pay NIIT (3.8%) on net investment income and an additional 0.9% Medicare tax on earned income over thresholds. Forecast these taxes when modeling marginal rates.
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Alternative Minimum Tax (AMT): Certain incentive stock option exercises, large tax preference items, or state/local tax deductions can trigger AMT. Simulate AMT exposure before large equity exercises.
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State tax planning and SALT cap work‑arounds: SALT limits remain a key issue for taxpayers in high‑rate states. Consider state‑level tax planning, withholding adjustments, or prepayment strategies where permitted by state law.
Business Owner Considerations
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Payroll timing and S‑corp compensation: For S‑corporation owners, reasonable compensation, timely payroll tax deposits, and SEP/SIMPLE/401(k) plan contributions require coordination. Delay or accelerate invoices and payroll where it makes tax sense and is compliant.
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Section 199A and pass‑through planning: Owners of pass‑through businesses should analyze QBI phaseouts and how wage and qualified property tests affect deductions.
Practical Tips and Common Traps
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Don’t wait until April: Tax moves late in the year (e.g., bunching, harvesting, conversions) produce the best outcomes when planned several months in advance.
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Avoid emotional trading near year‑end without a tax plan: Reactionary trades can create short‑term gains and higher taxes.
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Use professional software or a CPA: High‑income tax situations often require modeling multiple scenarios. Use a CPA who runs projections and recommends specific moves rather than generic advice.
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Maintain a simple audit folder: Keep digital copies of receipts, tax return worksheets, and correspondence. If you receive an IRS notice, early documentation speeds resolution.
Examples from Practice
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Bonus withholding and estimated payments: A client received a large year‑end bonus and underwithheld. By increasing withholding in November and making a December estimated payment, we avoided the underpayment penalty and spread the tax burden.
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Charitable bunching with a DAF: I advised a family to fund a DAF in a high‑income year to capture a larger itemized deduction. They then distributed grants to charities over three years, smoothing their giving without paying capital gains.
Key Resources and Authorities
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IRS — Tax Withholding and Estimated Tax (Tax Topic 505) and Form 1040‑ES for estimated payment rules (irs.gov). Exact thresholds and forms change year to year; always check current IRS releases.
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Consumer Financial Protection Bureau (consumerfinance.gov) for basic tax planning and cash‑flow guidance.
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FinHelp articles: “How to Calculate Your Estimated Tax Payments for the Year” (https://finhelp.io/glossary/how-to-calculate-your-estimated-tax-payments-for-the-year/), “Donor‑Advised Funds (DAFs)” (https://finhelp.io/glossary/donor-advised-funds-dafs/), and “Bunching Strategies to Maximize Charitable Deductions” (https://finhelp.io/glossary/bunching-strategies-to-maximize-charitable-deductions/).
Professional Disclaimer
This checklist is educational and illustrative, not individualized tax advice. Rules for retirement accounts, charitable deductions, AMT, NIIT, and state taxes change frequently. Consult a CPA or tax attorney before implementing strategies that affect your tax return.
Actionable Next Steps (30‑60 day plan)
- Schedule a 60‑minute year‑end projection with your CPA or advisor.
- Confirm payroll deferrals and employer plan contributions for the remainder of the year.
- If you expect large capital events, set a calendar reminder to review harvesting opportunities two months before year‑end.
- If you plan charitable giving, decide whether bunching into a DAF makes sense and fund by December 31 to claim the deduction for the year.
Closing
A Year‑Round Tax Checklist converts tax complexity into a series of manageable actions. High‑income households that review projections quarterly, document decisions, and coordinate retirement, investment, and charitable moves will reduce surprises and keep more of what they earn.
