Tax Planning For Freelancers

You’re losing money if your salary isn’t structured smartly. As a CA and finance consultant, I’ve reviewed salary structures for hundreds of professionals. And I see the same pattern every time: decent income, poor planning, and benefits left on the table. If you’re salaried and want to build real wealth, here’s what you need to start paying attention to: ✅ Choose the right tax regime - New Regime: Offers a ₹75,000 standard deduction and simplified slabs, with tax-free income up to ₹12 lakh. - Old Regime: Better if you leverage HRA, LTA, or deductions like 80C and 80CCD(1B). Use a tax calculator to pick the winner. ✅ Tap into Tax-Free Allowances - If you rent, use HRA to significantly lower your taxable income (old regime). - Use LTA to cover two domestic trips every four years (old regime). - Meal Vouchers up to ₹50 per meal for two meals/day is tax-free (old regime). ✅ Maximize deductions smartly - Section 80C: Invest up to ₹1.5 lakh in EPF, PPF, ELSS, or insurance (old regime). - NPS: Add ₹50,000 under 80CCD(1B), plus employer contributions (10–14% of salary, both regimes). - Health Insurance: Claim ₹25,000–₹75,000 under 80D for premiums (old regime). ✅ Watch your standard deduction ₹75,000 in the new regime, ₹50,000 in the old. Check your Form 16 to ensure it’s applied. ✅ Bonus isn’t for splurging Treat it as capital. Invest at least half in ELSS, mutual funds, or your emergency corpus. Your salary is more than a paycheck, it’s a system for financial growth. Optimize it to keep more of what you earn. What’s one tax-saving move you’ve made that actually worked?

Most high-income professionals overpay in taxes not by a little, but by hundreds of thousands of dollars. And the worst part? Most of them don’t even realize it’s happening I recently worked with an executive who was unknowingly missing out on over $500,000 in potential tax savings. Like many high-income professionals, she assumed her CPA was handling everything. But here’s the problem: 🚫 Most CPAs think backwards, not forwards. They file taxes based on what already happened. 🚫 They don’t integrate financial planning, investments, and tax strategy. 🚫 Some of them miss opportunities that can save you money long-term. How We Fixed It & Saved Her Over $500K ✅ 1. The HSA Strategy – $20K+ in Lifetime Tax Savings She had access to an HSA (Health Savings Account) but wasn’t using it. Why does this matter? 👉🏾HSA contributions are tax-deductible. 👉🏾The money grows tax-free. 👉🏾Withdrawals for medical expenses are tax-free. By fully funding it every year, she’ll save $20,000+ in taxes over her lifetime. But here’s the kicker: we also helped her invest it properly so the account grows instead of just sitting in cash. ✅ 2. The Roth Conversion Strategy – $500K+ in Tax-Free Growth She was anticipating losing her job and had multiple old retirement accounts just sitting there. Instead of letting those accounts stagnate, we saw an opportunity: 👉🏾She was having a low-income year, which meant she could convert $100,000 into a Roth IRA at a lower tax rate. 👉🏾That $100K will now grow tax-free—meaning if it reaches $600K or $700K in retirement, she’ll never pay a cent in taxes on that money. ✅ 3. The Bonus Strategy – Tax-Loss Harvesting We also helped her offset investment gains using tax-loss harvesting, a strategy that allows you to sell underperforming investments and use the losses to reduce your tax bill. By combining these strategies, we helped her: 💰 Save $20K+ in taxes on HSA contributions 💰 Unlock $500K+ of future tax-free income through Roth conversions 💰 Offset capital gains and lower her tax bill through tax-loss harvesting And she almost missed out on all of this because she assumed her CPA was handling everything. If you’re making multiple six figures, but you aren’t actively planning your tax strategy, you’re leaving money on the table plain and simple. The best financial strategies aren’t about making more money they’re about keeping more of what you earn. If you want to see where you might be overpaying, shoot me a message. Let’s make sure you’re taking advantage of every opportunity. P.S See the look on my face…don’t make me have to give you that look because you’re paying more than your fair share in taxes. 😂

You're making $200,000 as a solo biz owner. One vehicle can boost your wealth strategy dramatically. A Solo 401(k). It's just like a regular 401(k). But you get more flexibility with it. You can contribute up to $23,500 on the employee side. Each of which can be either pre-tax or Roth. (It's not an IRA so no income limits) But that's not all. Since you are also the "employer", you can also match in here. This amount can be up to 20%-25% of the salary to the employee (AKA yourself) However, that's not where the magic occurs. If the plan allows and you have enough income, you could contribute additional after-tax money into it. This money can then be converted into the Roth portion. Also called a Megabackdoor Roth. So in summary: The employee limit + employer match + after-tax = $70,000 limit for 2025 It essentially becomes a super vehicle for solo biz owners. - More investment choices - Larger contribution limits - Better choices in tax location - More flexibility with administration You should always prioritize reinvesting in the business. But when you are ready to diversify away? This is your partner in finance.

Most wealthy individuals do not file their taxes by April 15 They file an extension Business returns, K-1s, and multiple entities often make filing on time impossible But here is where things get tricky Even if your return is not filed, your taxes are still due by April 15th And your Q1 estimated payment for the new year is also due So you are making decisions for two tax years at the same time… without final numbers This is where good planning matters So what do you do? 1. You need to get really dialed in estimates of what you owe for the prior year 2. You need to use those estimates to try and nail down what 110% safe harbor will be 3. You need to predict this years income and see if 90% safe harbor is the better option 4. You need to see if you are estimated to be overpaid and what would apply and if Q1 is needed 5. You need to make a payment for 2025 and Q1, and most times making all as extension payment makes sense. Why? By doing this, you help protect yourself for 2025, and then the overpayment will get applied to Q1. If you do them separately, that Q1 payment won't go backwards Tax planning starts with estimates, quarterlies, what payments to make, saving for what you owe, if you will do 90% or 110%, etc. Then it goes to how to reduce your lifetime taxes

One of the key things we do with clients from a tax planning perspective is eliminate (or at least mitigate!) underpayment penalties and surprise tax bills. And it's especially important now as underpayment penalties are getting much more expensive - the IRS is now using an 8% interest rate on underpayments. Here are some considerations to help you avoid underpayment penalties and surprise tax bills (geared towards high earners with equity compensation): 1. Check to see what your safe-harbor tax withholding amount is for the year. It equals 110% of what you owed last year. If you pay in at least that much for the current year from paycheck withholding and estimated payments, you won't have an underpayment penalty (but you could still have a big tax bill). 2. If you are in a high tax bracket (32%+), consider increasing the withholding percentage on your RSUs (if your employer allows it). The default is 22% which is too low for most of our clients. 3. When you realize significant capital gains, make an estimated payment within the quarter of the sale. (There are options to pay throughout the year, but this is the easiest.) 4. Speak with your CPA about filing form 2210 to "annualize" a large windfall received later in the year. #financialplanner #cfp #taxplanning #equitycompensation

Taxes feel inevitable. Leaving money on the table is not. Here is how to close the gap. Step 1: Find hidden tax leaks →Review returns. Flag missed deductions with your CPA. Step 2: Align your entity structure →Match entities to income, liability, and exit strategy. Step 3: Accelerate depreciation →Cost segregation on a $1M property can unlock $200K in deductions. Step 4: Time income intentionally →Prepay expenses or defer income before year-end to shift your bracket. Step 5: Build a long-term tax roadmap →A planned 1031 exchange can defer six figures. Strategy compounds just like capital. Most investors plan deal to deal. Wealth builders plan decade to decade. Does your tax strategy reflect where you want to go, or is it still catching up to where you have been?

“I’m bracing for another huge tax bill... tell me what I’m missing.” That was the first sentence in this week’s check-in with a client juggling RSUs, freelance income, and severance. We opened their final paystub, reviewed freelance income, pulled data on estimated tax payments made, and fed everything into Holistiplan Scenario Analysis together. Within minutes the looming five-figure shortfall melted to a modest balance, and a plan: -Add to a solo 401k plan for freelance income -Top off HSA contribution -Add to a Donor Advised Fund -Smooth out a taxable inheritance distribution Clarity replaces anxiety when you run the numbers early and have time left in the calendar year to make an impact. Advisors - want to learn how I "cook"? Check out the recording in the comments from my latest tax planning educational webinar #taxplanning #equitycompensation

32 year old Makes $160K/year in his W-2 and another $200K net in 1099 income Before we talked: - $20K tax bill on top of $60K of estimated payments - Cash heavy - Not sure what he can do After we talked: - Set up a solo 401K for his 1099 income - Contribute $14K as an employee contribution to this plan pre-tax. 14K * 35% marginal tax bracket is a $4,900 tax savings on 2024 taxes. He can only do $14K since he contributed $9K as an employee to his W-2 company 401K plan - Contribute $37K as an employer contribution to this same solo 401K plan pre-tax. $37K * 35% marginal tax bracket saves him $12,950 on 2024 taxes - Contribute $3,150 to a HSA with Fidelity. He put $1K in his company HSA so he can still put $3,150 in a Fidelity HSA. Reduces his tax bill by $1,102 Then we'll move into 2025 tax planning to be more proactive on what we can do. Once he gets married he can do Roth conversions that we deferred out of 35% marginal tax brackets. If he wants he can do a retroactive traditional IRA contribution to do a backdoor Roth for 2024 and 2025. He could also do another $18K as a mega backdoor Roth via his solo 401K plan but he would like to buy a house in a couple of years so we might hold off on that ($18K mega backdoor Roth contribution is accessible immediately tax-free and penalty-free though, backdoor Roth has a 5 year holding period)

S-Corps are supposed to save you money. My client's almost cost him $40,000 a year. Back in June, my client had converted his LLC to an S-Corp. Smart move for saving on self-employment taxes. But that made his SEP IRA—the retirement plan he'd been using for years—basically useless. With an S-Corp, you have to pay yourself a reasonable W-2 salary. His was going to be around $50K for 2024. SEP IRA contributions are limited to about 20% of your W-2 wages. 20% of $50K = $10,000. So $10,000 was all he could contribute for the full year. But he had way more cash in the business that he wanted to put away for retirement. With a Solo 401(k), we could contribute up to $50,000 as an employer profit-sharing contribution. So with the same $50K salary, we were able to put away 5x the retirement savings and create a $40,000 swing in tax savings. If you're still using a SEP IRA after converting to an S-Corp, there's a good chance you’re leaving massive retirement contributions and tax savings on the table. The tax savings from the S-Corp are real, but you have to make sure you have the right retirement plan structure to go with it. Otherwise, you're just trading one problem for another.

I have paid millions in taxes over the past decade. Yet, I have saved millions off my lifetime tax bill through tax planning. Here are 7 tax planning strategies I have used as an athlete and an entrepreneur: ~ 1) Retirement Accounts The four most common ones I have used: •401(k) •Sep IRA •Roth IRA •Solo 401(k) Example: Each time I contribute to one of these accounts I am either getting a current-year tax benefit (deferral) or a future-year tax benefit (tax-free growth). ~ 2) Tax Efficient Investing 90% of my net worth is invested in taxable accounts. I focus on things that can: •Compound efficiently •Defer the taxes as long as possible •Investments I want to hold for decades Examples: ETFs, Muni Bonds & Real Estate are 3 of my favorites. ~ 3) Tax Loss Harvesting Things to consider with TLH: •TLH can create a future tax asset •$3,000 in losses per year can offset ordinary income •Losses captured in a year can be carried forward to future years Example: My captured losses have helped me reduce my tax bill. ~ 4) Donate to Charity My favorite tool here is the DAF: •Gift appreciated stock •Invest inside the DAF •Grant stock and future gains to charity Example: I have maximized this by bunching my donations together in my highest earning years. High Tax Bracket = Bigger Tax Savings ~ 5) State Residency Federal taxes are required, state taxes can be a choice. •Several states have no state income tax •Florida, Texas, and Tennessee are the most popular Example: During my baseball career, I was a Florida resident saving me hundreds of thousands in taxes. ~ 6) Business Expenses The things you are already spending money on can be deducted as a business owner. •Phone bill •Legal work •Home office •Travel expenses Example: You are in the 37% tax bracket, and you get to deduct $50k during the year. Tax savings = $18,500 ~ 7) Tax Election Your LLC is an entity structure, not a tax election. Types of tax elections: •S Corp •C Corp •Partnership •Sole Proprietorship Example: Moment Private Wealth is an S Corp which saves me on self-employment taxes. Athletes can do the same thing with off-field income. ~ Taxes are a lifetime game. I have used these 7 strategies to keep more of what I have earned. If you found this helpful or it made you think, share it with your audience. *This is not tax, legal, or investment advice. Consult with your team of professionals. 📌 If you find this helpful, please share it with your network ♻️ and follow me Jacob Turner for more ways to get smarter with your money. 💵.