Chapter 26: Individual Tax Planning Opportunities

This chapter focuses on planning choices individuals can make to improve tax outcomes across timing, deductions, and preferred accounts. The exam emphasis is strategic: understand why a taxpayer would accelerate, defer, shift, or shelter an item and what tradeoffs follow.

In This Chapter

• Timing Strategies: Deferral vs. Acceleration of Income explains how timing choices affect tax liability.
• Mitigating AMT Effects Through Tax Preference Management covers planning around alternative minimum tax exposure.
• Use of Tax-Advantaged Accounts (HSAs, FSAs, Retirement) explains how account selection changes tax treatment.
• Harvesting Capital Gains or Losses addresses strategic realization decisions near year-end and beyond.

How to Use This Chapter

• Read this chapter after the core individual-tax computation chapters so the planning moves have context.
• Focus on the tax consequence each strategy is trying to change and the limits that can block it.
• Revisit it when the question asks for the best planning step rather than the current-year return amount.

In this section

• Timing Strategies: Deferral vs. Acceleration of Income
  Learn how to strategically defer or accelerate income by analyzing changing tax rates and evolving standard deductions, optimizing your annual tax liabilities and maximizing financial flexibility.
• Mitigating AMT Effects Through Tax Preference Management
  Explore strategies to reduce Alternative Minimum Tax liabilities by identifying major preference items and recalibrating deductible expenses, deferrals, and timing of transactions.
• Use of Tax-Advantaged Accounts (HSAs, FSAs, Retirement)
  Comprehensive guide to leveraging tax-advantaged accounts—including HSAs, FSAs, and retirement plans—to reduce taxable income, maximize savings, and strategize for long-term financial growth.
• Harvesting Capital Gains or Losses
  Discover strategies for effectively harvesting capital gains or losses, including the netting approach, short-term vs. long-term considerations, and year-end triggers to optimize tax outcomes.