Tax Planning Tips For Individuals In California

Most people just receive their tax returns and call it a day. Very few engage in proper tax planning, which is a great shame. People will be surprised at how much cash they can save with the right planning.

In this article, we are going to share some top tax planning tips for individuals in California. These tips may help to reduce your tax obligations slightly.

We are going to try and stick to the tips that would benefit the most readers. There are many other ways to plan your tax. The tax preparers at Robert Hall & Associates can look at your specific file and provide custom tax planning.

Claiming Expenses For Work Carried Out At Home

Due to the pandemic, a lot of people were forced to work from home. You may be one of those. A lot of people believe that because they worked from home, they can claim any home office expenses on their tax returns. Sadly, this is not the case.

If you are a full-time employee that was asked to work at home during the pandemic, then you cannot offset any of the expenses to get a tax break. However, if you are self-employed, you can.

If you are self-employed, then we suggest that you itemize your home office expenses over the last year. You will be able to claim many of these and may be able to enjoy a tax break.

Pay Attention To Potential Deductions

Many people just submit their tax returns without really thinking about it. However, you will be surprised at the number of deductions that you could potentially make on your tax return.

Everybody knows about charitable deductions, but did you know that health and dental expenses can potentially be deducted?  You may want to plan these expenses to be in the same tax year, if possible.

Make Full Use Of Retirement Plans

You should always be planning for retirement, even if you are not doing so with tax planning in mind.

Traditional IRA accounts tend to be tax-deductible. There are a few restrictions, but most people will benefit a little here.

Remember, you aren’t just planning to save tax now. You are also planning to save tax in the future. This means that you shouldn’t avoid things like Roth IRA accounts. Sure, you must pay tax on your contributions. However, anything that you withdraw when you retire can be done so tax-free.

Consider Using Backdoor Roth IRA

Any tax preparer will likely tell you to consider using a backdoor Roth IRA if you are serious about tax planning for the future.

Normally, if your income is over a certain amount, you cannot open a Roth IRA. Even if you can open a Roth IRA, there will be limits on how much you can deposit each year.

A backdoor Roth IRA gets around this. With this method, you will be able to move cash from a traditional IRA account to your Roth IRA. There are no restrictions. You will have to pay tax for the move. However, once again, any cash that you receive from the Roth IRA at the time of retirement will be tax-free.

Take Advantage Of Education Tax Benefits

There are a few different education-related tax breaks available. Perhaps the biggest one is the Section 529 option.

Section 529 works in a similar way to a Roth IRA. This means that you pay tax on any contributions, but cash distribution is tax-free. It’s not taxable as long as it is used for education purposes.

Some of your contributions to a section 529 plan will be free of gift tax. This is currently up to $16,000 per contributor to the account. This means that a couple each has a $16,000 limit that they can contribute for it to remain free of gift tax.

Use Health Savings Accounts

An HSA is a tax-deferred system, much like a traditional IRA. This means that you don’t pay tax on any contributions, but you will pay tax on your withdrawals. Well, most withdrawals. Any withdrawals for qualified medical expenses will be tax-free.

If your employer offers an HSA, then you may want to consider taking advantage of it. If your employer does not offer an HSA, then there are plenty of options in California that you can use.


We don’t want to go too deep on how to plan your investments. We could write a whole book on it.

What we will tell you is to start thinking about how your investments are panning out at the end of the tax year. For example, selling any securities that you may have to unlock unrealized losses. These can then be used to offset any tax obligation on your gains.

You may even want to start thinking about investing in areas that may save you some cash each year e.g., mutual funds. There are limits on how much loss you can claim, so we suggest that you chat with our tax preparers.

Talk To Our Tax Preparers

There is no denying that tax laws can be complicated. There are plenty of opportunities for tax planning, but they may not always be apparent. If you have a lot of cash flowing in or a lot of expenses, then talk to our tax preparers. They may be able to help you with your tax planning. You could potentially save thousands of dollars every year.

Have tax questions? Ask Us.

The first step to hassle-free accounting, tax returns, and tax planning starts by reaching out to one of our representatives.

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Robert Hall and Associates Tax Consultants