As tax season reaches full swing, it’s a crucial time for high earners and those nearing retirement to pause, recalibrate, and take intentional steps that can protect and grow your wealth—not just for April, but for years to come.
Key Reminders During Tax Season
1. Maximize Retirement Contributions
You can still make IRA and HSA contributions for last year until the tax filing deadline. High earners, don’t forget about the Backdoor Roth IRA strategy if you’re phased out of direct Roth contributions.
2. Review Taxable Investment Accounts
Evaluate opportunities to harvest tax losses (or gains, if your income is unusually low this year) and make sure your portfolio is still tax-efficient.
3. Watch Out for NIIT and Additional Medicare Taxes With higher income, you may be subject to the 3.8% Net Investment Income Tax and the 0.9% Additional Medicare Tax. Smart tax management can soften the impact.
4. Double-Check RMDs and QCDs
If you’re 73 or older, ensure RMDs (Required Minimum Distributions) are addressed. Charitably inclined? Consider a Qualified Charitable Distribution (QCD) from your IRA to satisfy RMDs tax-efficiently.
5. Don’t Overlook State Tax Issues
Many high earners face significant state taxes. Consider whether a partial Roth conversion, business deductions, or multi-state income planning could help capture more savings.
Actionable Steps for High Earners & Pre-Retirees in 2026
1. Adjust Withholding or Quarterly Payments
If your income fluctuates (bonuses, RSUs, side businesses), update your withholding or estimated payments now to avoid a surprising tax bill—or penalties—next year.
2. Explore Strategic Roth Conversions
Retiring soon? A gap between retirement and starting Social Security or full RMDs offers a “low-tax window” to convert traditional IRA assets to a Roth, reducing future required distributions and locking in today’s rates.
3. Review Executive Compensation & Stock Options
Decide if exercising options, restricted stock vesting, or deferred comp is best this year, or best staggered to manage your tax brackets.
4. Consider Bunching Deductions/Charitable Giving
High earners often benefit from “bunching” deductions—making two years’ worth of charitable gifts this year, for instance, to maximize itemization in alternate years.
5. Update Estate Plans & Gifting Strategies
Exemption amounts and estate tax laws continue to change. Review your documents and consider tax-smart gifting to heirs or charities while the current high exemption is in place.
Set the Stage for Year-Round Tax & Wealth Planning
Once you’ve filed, revisit your tax return with your advisor to:
- Identify new strategies or risks based on your unique income and deductions
- Coordinate financial and tax planning for significant events (retirement, sale of a business, windfalls)
- Build a proactive plan for the rest of 2026, keeping tax efficiency at the forefront
High earners and pre-retirees have the most to gain (or lose) from smart tax moves. Strategic action now can mean more flexibility, lower taxes, and more control over your legacy. If you’d like to review your return or discuss next steps, reach out and let’s turn this tax season into a strategic advantage.
Advisory services offered through FND Wealth Management, a Member of Advisory Services Network, LLC. Insurance products and services offered through Ferlita Nussel Dowell Financial Group. Advisory Services Network, LLC and Ferlita Nussel Dowell Financial Group are not affiliated. Advisory services offered through FND Wealth Management, a member of Advisory Services Network, LLC. FND Wealth Management does not offer tax or legal advice. Insurance products and services offered through Ferlita Nussel Dowell Financial Group. Tax services offered through FND Tax Management. Advisory Services Network, LLC is not affiliated with Ferlita Nussel Dowell Financial Group or FND Tax Management.