Tax Planning & Projections
A tax projection estimates what you will owe before the year ends, while decisions can still change the outcome. Once December 31 passes, almost every planning option closes. Blue Sage runs a mid-year and a fourth-quarter projection, sets your quarterly estimates against it, and tells you what actions are still available.
What's included
- Mid-year projection with an estimate of the full-year position
- Fourth-quarter projection and year-end action list
- Quarterly estimated tax calculations, federal and state
- Entity structure review and election modeling
- Retirement plan selection and contribution planning
- Timing of income, expenses, and equipment purchases
- Withholding adjustments so refunds and balances land where you want them
- Written summary you can act on, not a verbal conversation you forget
Who this is for
Owners whose income moves year to year, anyone who has been surprised by a balance due in April, and people whose situation changed — a sale, a new state, a large bonus, a first profitable year. Planning is worth the most in the years when something is different.
It is also for people paying quarterly estimates based on a number someone calculated once and never revisited. Estimates built on last year's income are a guess, and the penalty for underpaying is charged even when the return itself is filed and paid on time.
Deadlines and rules worth knowing
| Item | What applies |
|---|---|
| Mid-year | Widest range of options. Entity elections, payroll changes, and retirement plan setup are all still open. |
| Fourth quarter | Timing of income and expenses, equipment purchases, charitable giving, and withholding adjustments |
| By December 31 | Most deductions must be paid or placed in service by year end to count for that year |
| After December 31 | Retirement contributions are among the few remaining levers, and only for certain plan types |
| Quarterly estimates | Due in four instalments through the year. Underpayment interest is charged even if the return is filed on time. |
| Safe harbour | Paying a set percentage of the prior year's tax generally avoids underpayment penalties, with a higher percentage for higher earners |
| Withholding | Counts as paid evenly through the year regardless of when it was withheld — useful for fixing a shortfall late |
Why the April conversation is the wrong one
By the time a return is being prepared, the year is closed and the number is the number. Nearly everything that could have changed it — how you were paid, when you bought equipment, which retirement plan you set up, whether an election was made — had to happen before December 31.
The point of a projection is to move that conversation to October, when the options are still open and the estimate is accurate enough to act on. It also means the April figure is confirmation rather than news, which is the difference between planning for a payment and scrambling for one.
How we work
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Review what exists
We read last year’s return and whatever records you have. Most of what needs fixing is visible quickly.
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Fixed quote in writing
Scope and price before anything starts, counting entities, states, and any cleanup needed.
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File and maintain
Returns prepared and filed, notices answered, and a projection before year end.
Questions
When should tax planning happen?
Mid-year and again in the fourth quarter. A mid-year projection leaves the widest range of options open, including entity elections, payroll changes, and retirement plan setup. A fourth-quarter projection catches how the year actually turned out while timing decisions on income, expenses, and purchases can still be made before December 31.
What is a safe harbour for estimated taxes?
Paying at least a set percentage of the prior year's total tax through withholding and estimates generally protects you from underpayment penalties, even if this year's income is much higher. The required percentage is higher for taxpayers above an income threshold. It is the simplest protection when the current year is hard to predict.
Why do I owe a penalty when I paid my tax on time?
Income tax is due as income is earned, not in a lump sum at filing. If too little was paid in through withholding and quarterly estimates during the year, an underpayment charge applies even when the return is filed and paid by the deadline. Adjusting withholding is often the easiest fix.
Last reviewed 11 September 2026 by Fahadun Nabi, Founder, Blue Sage Tax and Accounting Inc.. General information, not advice for your specific situation.
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