$220,423: The Price of Putting Tax Planning on Autopilot

The Number

$220,423.

That's the amount David, a new client who recently came to me, owed in taxes. And not because he tried to dodge them.

He'd followed his former CPA's advice, diligently making quarterly estimated payments throughout the year.

This wasn't some penalty from the IRS.

This wasn't an audit adjustment or a calculation error.

This was simply what he owed on top of everything he'd already paid throughout 2024.

Sometimes your "best" business year can become your most expensive surprise.

The Story

Let me tell you about David.

He runs a marketing agency that pulled in around $2 million in revenue and $1.2 million in net profit in 2024.

By most standards, he was absolutely crushing it.

This was David’s third year working with Gary, his longtime (now former) CPA. In David’s eyes, the system was humming; he just closed his best year ever and was riding high.

On top of his agency's success, David had also ventured into two "side projects" with a buddy in 2024.

These investments generated consistent, healthy returns throughout the year.

Nothing crazy, but steady income that somehow never came up during his brief quarterly check-ins with his CPA.

And therein lay the issue with his relationship with Gary:

It was purely transactional.

File the return, pay the bill, see you next year.

There were no strategic conversations, no "what else is happening in your financial world?"

Just compliance. No real planning.

Fast forward to early April 2024.

David wasn't overly concerned about filing his taxes, as he’d made all the recommended estimated payments during the year.

He knew he might owe a bit more due to his business's big year, but nothing alarming.

He was not prepared for the email that followed.

Subject: "Draft Return & Results." Body:

$220,423? There must be a mistake, David thought.

But there wasn't.

Those two “side projects” had been quietly generating taxable income all year.

Income that never factored into the quarterly payment calculations that Gary had made for David throughout the year.

With just weeks before the tax deadline, David found himself in full scramble mode.

Liquidating stock positions, draining money market accounts, pulling from anywhere he could find liquidity.

The money was there, thankfully, but watching six figures disappear from his carefully built portfolio in a matter of days wasn't exactly how he'd planned to celebrate his most profitable year ever.

"I felt like I was being punished for success," he told me months later, still processing the amount due.

When he probed Gary for the reason behind the surprising tax bill, the CPA offered the age-old adage:

"Owe a lot of taxes? That just means you made a lot of money!"

As if that response ever lands the way CPAs think it will.

If that's the response you're used to receiving, it might be time to do what David did and look for a new CPA.

Or, at the very least, adjust your strategy moving forward.

The Strategy

David's story perfectly illustrates the expensive difference between tax compliance and tax strategy.

His original CPA was excellent at filing returns and was certainly knowledgeable and experienced.

But where he failed was seeing the bigger picture.

It's easy to play the blame game here.

Was it the CPA's fault for not doing proper due diligence?

Was it David's fault for not emphasizing his new investments and confirming they were included in the projections?

The fault is irrelevant.

What’s relevant is what is real: the amount due.

What’s real is figuring out what went wrong and how to avoid the same mistake going forward.

Here's what went wrong and how to avoid the same trap:

1. The Communication Gap:

   David's tax professional only knew about his main business.

   He knew nothing about the side investments generating steady income all year.

   This wasn't malicious. Gary was doing exactly what most CPAs do: using last year's information to project this year's taxes while juggling dozens of other clients during busy season.

   Meanwhile, David was heads-down running his agency, assuming his "tax guy" had the full picture.

   The result? Two people operating with half the information, creating a $220K blind spot.

2. The Quarterly Illusion:

   Making those four estimated payments throughout the year feels responsible, like you're staying ahead of the game.

   But here's the trap: David's quarterly payments were reasonably calculated... for 60% of his actual income, given his tax rate.

   Gary projected payments based on the agency's previous year's performance, completely missing the additional income flowing in from David's investments.

   It's like budgeting for groceries while forgetting you're hosting Thanksgiving dinner.

   The math works until it doesn't.

   Those payments weren't protecting David. They were creating dangerous overconfidence right up until April.

3. The Reactive Relationship: 

   Most business owners think they have tax planning when they really have tax cleanup.

   David would get Gary's annual email: "Hey, need your documents for filing."

   Documents get submitted, return gets filed, payment gets made.

   Rinse and repeat.

   But real tax strategy happens much earlier, certainly not in April.

   It's asking "What if we structure this differently?" instead of "How much do I owe?"

   By the time David saw that $220K bill, every planning opportunity for 2024 had already expired.

   No deductions to accelerate, no income to defer, no strategies left to deploy.

   The damage was done 12 months earlier when the planning should have started.

The real lesson? Your tax planning should be as comprehensive as your income streams.

Every revenue source, every investment, every side project needs to be part of the conversation.

Here's how to fix it:

1. Schedule Quarterly Strategy Calls with a specific Agenda

Don't just make payments, make decisions.

Every quarter, review all income sources, project your year-end numbers, and adjust estimated payments by the 15th.

David now blocks 60-90 minutes every quarter for this.

It's the most valuable meeting on his calendar.

2. Create a Complete Financial Picture

Your financial overview should include everything generating income.

Main business, side investments, rental properties, consulting gigs, crypto gains, etc.

If it creates taxable income, it needs to be in the conversation.

Use a simple tracker or spreadsheet that you update monthly.

This should only take 5 minutes or so.

5 minutes to potentially save thousands.

Sounds like a pretty nice ROI if you ask me.

3. Ask the Right Questions During Every Interaction

You don’t know what you don’t know, and neither does your CPA.

This is why is pivotal to ask all the questions you have. There are no dumb questions.

• "What income sources aren't reflected in my quarterly payments?"

• "If I doubled my side income tomorrow, how would that change my tax bill?"

• "What's my effective tax rate across ALL income streams?"

• "What planning opportunities are we missing for next year?"

These aren't one-time questions either.

They should be part of every quarterly check-in.

4. Plan Forward, Not Backward

Stop using tax planning as a rearview mirror.

Start each year by modeling different scenarios:

• What if you sell that investment property?

• What if you go into this investment with your buddy?

• What if revenue grows 50%?

Real planning means having answers before the questions become expensive problems.

Success without planning is just expensive luck.

David learned this lesson at a cost of $220,423 and a lot of stress.

But the good news is, you can avoid making a similar mistake as David.

The Bottom Line

David's "best year ever" became a masterclass in why comprehensive tax strategy matters more than ever as your success grows.

The more income streams you have, the more coordination your tax planning requires.

The good news? Once we rebuilt his tax strategy from the ground up, David hasn't had a surprise like that since.

His quarterly payments now account for his complete financial picture, and we meet regularly to adjust course as his business and investments evolve.

What You Can Do This Week"

• Pull last year's tax return and list every income source

• Identify new income streams for the current year and any income streams that no longer exist

• Text/email your CPA right now asking: "Do you know about all my income streams?"

• Set a calendar reminder for quarterly check-ins

If this story sounds familiar, or if you're wondering whether your own tax planning covers all your bases, reply to this email with “TAX AUDIT” and I’ll send you the 3-question checklist David wishes he’d had.

I run Alignd - a modern CFO and tax strategy firm for founders who want their business, taxes, and personal wealth working together (not against each other).

If you’re looking for proactive support, not just tax prep, I’d love to help you avoid your own 6-figure surprise.