Let’s be honest: Tax planning isn’t exactly fun (nor is paying taxes). But ignoring it could mean parting with money you didn’t have to.
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If you’re making one of these seven common tax planning mistakes — and many people are — you could face higher tax bills or missed opportunities come 2026. Christopher Stroup, a CFP and founder of Silicon Beach Financial, explained what to watch out for and how to get ahead of the curve.
Tax planning should be “proactive, not reactive,” Stroup insisted. “When you wait until March, most of the best opportunities are already gone.”
In fact, even sooner than that, as by year-end many strategies are off the table, especially for equity compensation (non-cash pay, such as stock), retirement savings and charitable giving, Stroup said. “Last-minute tax planning tends to be reactive, rushed and sloppy. Real tax savings require time to coordinate across your income, goals and entity structure.”
By waiting until the end of the year, you could be failing to coordinate with your financial goals at best or missing important deadlines and subjecting yourself to higher tax or penalty fees.
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Another common mistake is neglecting to track your cost basis, especially for stocks, crypto or equity compensation, Stroup said. Your cost basis is essentially what you originally paid for an investment, including commissions or fees. It’s easy to lose records over time he said, but if you don’t have documentation to prove it, you could be taxed as if the entire sale was profit — even if you only made a modest gain or none at all.
If you experienced a job change during the year but fail to account for it in your withholding — the amount of taxes you pay — this could cause problems, Stroup said. “A second job or dual-income household might bump you into a higher bracket. If you don’t update your W-4 or check your withholding early, you might face an unexpected tax bill and possibly a penalty.”
If you earn income that must be reported on a 1099, either as a business owner or freelancer/contractor, you’re expected to pay estimated quarterly taxes. “Many freelancers forget to account for self-employment tax, which can add 15.3% to their liability,” Stroup said.
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