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How TaxPlanIQ Leads to Clarity in Client Advisory

May 3, 2022 TaxPlanIQ Support team

Without the proper tool, tax planning can be complex and difficult. TaxPlanIQ is the perfect tool for accountants looking to help their clients build out a tax plan. It can help you gain clarity about a client’s situation and what other information you still need to know in order to build them a more comprehensive plan.

TaxPlanIQ helps you make better decisions for your clients that save you time and your clients money. Below are two case studies that demonstrate how you can use TaxPlanIQ to build comprehensive tax plans with greater clarity.

Case #1

Sharla began the session by chatting with Luba about a new client’s tax situation. The client’s situation is particularly complex and has some interesting tax implications. Luba told Sharla that she helped this client file their first-quarter estimated taxes but that they plan to meet up once the client is back from a trip.

Background Info

Luba’s client is married, has two children (ages 3 &4), and supports his mother-in-law. The client started their C-Corp software company in 2000 with one other shareholder to speak of. In 2022, their company was acquired by another corporation, and the client received a sizeable amount of stocks and stock options. The client informed Luba that these stocks and stock options should qualify for a 1202 exclusion and that they would like to take advantage of that.

Following the acquisition of their C-Corp, the client intends to solely have a W-2 for his 2022 tax return. He did raise a concern about the high taxes due to the capital gains he received and the $100k state tax liability. He is aware of some of the common tax savings strategies, like charitable giving. His concern with charitable giving is the return on investment or, as he sees it, the lack thereof.

Looking forward to his 2022 tax return, the client has $1.1M in taxable income, split between $400k in wages, $700k in capital gains, and about $17k on a Schedule C.

Ways to Save—Strategy #1

To start with, Sharla recommended having the client set up a 401k plan and contributing that full $17k from the Schedule C. That said, she also noted that unless he’s contributing that money from an entity it really won’t garner him much in the way of tax savings. However, she said that determining some kind of retirement plan is definitely needed.

Strategy #2

In her background information notes, Luba had mentioned that she would like to set the client up with a donor-advised fund (DAF). Sharla asked what amount Luba was planning on assigning that particular strategy, however, Luba asked what she would recommend in this situation.

“With big bonuses that come through W-2s, there’s literally nothing you can do,” Sharla said. “You sometimes can do things with money that’s in a brokerage account. If they’ve got a good amount of income in the account, you can set up a Family Limited Partnership, put the brokerage account in the Limited Partnership, pay some management fees to a C-Corp… You’ve got to do it all in alignment to meet all of the criteria.”

If there were enough management fees going into that C-Corp, the client could potentially participate in a defined benefits plan, an HRA, and a variety of other tax savings strategies. 

Circling back to the DAF strategy, Sharla asked whether $10k would be a sufficient amount for the client. Luba reiterated the client’s concern about a lack of return on investment for charitable contributions.

Strategy #3

With a C-Corp, you can also enact some income shifting. Both Sharla and Luba mentioned that the client could pay their mother-in-law through the C-Corp to help do some income shifting. Luba did mention that the mother-in-law is 65 so they would have to take Social Security into account.


While there was certainly a fair amount of information given about Luba’s client, the status of the client’s work situation remained unclear. Sharla admitted that it’s difficult to create a firm tax strategy for a client who is just listed as a W-2 employee with no further information. Without further info, they were unable to create a full plan. Instead, Sharla had several questions for the clients.

Some of the next questions Sharla needed Luba to get answers for are:

  • Does he have a brokerage account with a lot of money sitting in it? If so, is that account generating income?
  • If the client isn’t interested in investing some of his money into charity, what would he like to invest his money in? What kind of ROI is he looking for?
  • Lastly, what’s going on with his capital gain from the sale of the stocks and options he received?

Case #2

Sharla then moved on to the second case study of the day, which was one of Tina’s tax plans. Tina’s tax plan was a little more straightforward, but it ultimately helped her gain some clarity as to how she could help her client save more money going forward.

Background Info

Tina’s client is a therapist with his own practice filing jointly with his spouse who is a licensed social worker. The client also has two children (ages 11 & 13). Tina noted that in 2020 the client’s business was set up as a Schedule C, but in 2021, they shifted him over to an S-Corp. The client’s total taxable income was $430k with a salary of $232k.

Ways to Save—Strategy #1

The first strategy Sharla recommended was an action that Tina already took—she converted his business over to an S-Corp. While this won’t save him much in the initial year, going forward it will save him a good deal of money because he will be taking a reduced salary. By reducing his salary, the client stands to gain $58k in tax savings.

Strategy #2

Sharla and Tina also discussed the client’s retirement plan options. Currently, the client is putting money into a Simplified Employee Pension plan, approximately $51k per year to be exact. Tina mentioned that due to his reduction in salary, the client won’t be able to put as much money into the SEP account. Sharla agreed and suggested having the client start up a Defined Benefits Plan, which he could sink around $100k into. 

Instead of simply replacing the SEP account with the DBP, Sharla recommended having the client do the DBP in addition to the SEP for the first year. “With the Defined Benefits Plan, the actuaries will have them start doing a 401k instead of a SEP,” Sharla said. “When you set up a Defined Benefits Plan, it’s always done in conjunction with a 401k.” 

Strategy #3

Additionally, Tina mentioned that her client just bought a beach house for short term rentals in another state. Sharla commented that it could be useful running a cost segregation on the rental. Tina agreed that normally that would be useful but questioned its efficacy in this situation, as the client bought the property in 2021 and has spent the last several months renovating it.

“If they’ve spent the last six months remodeling the property,” Sharla said, “they’ve probably spent at least the amount of money they would save off of the cost seg.”

Strategy #4

Lastly, they discussed a few ways to shift income from the client. The first strategy they discussed was to pay the kids. By doing this, they would save the client approximately $8k in federal taxes. The second strategy they discussed was to have the client’s wife max out an IRA. The client’s wife earns $23k on a Schedule C, so maxing out an IRA is a very viable option for her.

“If they’ve spent the last six months remodeling the property,” Sharla said, “they’ve probably spent at least the amount of money they would save off of the cost seg.”


Tina already had some great ideas to start with, but she gained further insight into how she could maximize her client’s tax savings with TaxPlanIQ. Using the strategies Sharla helped her develop, Tina can help her client save $43k in Year One and $111k from Year Two onward. Over a 10-year period, Tina’s client could save well over $1M!

Some of the next strategies Sharla discussed with Tina include: 

  • Convert the client’s business to an S-Corp and reduce his salary to $150k
  • Start a Defined Benefits Plan and 401k
  • Run a Cost Seg on the beach house rental
  • And shifting some of the client’s income to family members and retirement accounts

If you are interested in using TaxPlanIQ to better explain your value to your clients, sign up for a free trial today! 


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