Tax Projector Strategy Guides

Whether you’re modelling a QCD, a Roth conversion, an installment sale, or a change of state, the step-by-step instructions tell you exactly which fields to change and where to find them. Download the full PDF for screenshots showing every field location, or use this article as your quick reference.

[DOWNLOAD TAX PROJECTOR STRATEGY GUIDES PDF]

20-page guide with screenshots, field locations, and worked examples for all 16 strategies

Produced by: FP Alpha | Strategies: 16 step-by-step guides | Pages: 20

Strategy Index

Every strategy follows the same core workflow: (1) Create a base scenario, (2) Duplicate to a new scenario, (3) Make the strategy adjustments, (4) Click Perform and Save Calculations, (5) Compare results. The differences are in which fields you change.

Strategy	Category	Scenarios Needed
Qualified Charitable Distributions (QCDs)	Bracket Management	2 (base + QCD)
Donor Advised Funds (DAFs)	Bracket Management	4 (2 years × 2 strategies)
Health Savings Account (HSA)	Bracket Management	2 (base + HSA)
401k / 403b Contributions	Bracket Management	2 (base + contribution)
SEP / SIMPLE IRA Contributions	Bracket Management	2 (base + contribution)
Traditional IRA Contributions	Bracket Management	2 (base + contribution)
Realising Capital Losses	Bracket Management	2 (base + harvesting)
Realising Capital Gains	Bracket Management	2 (base + gains)
Tax-Aware Investing	Bracket Management	2 (base + new portfolio)
Roth Conversion	Income Shifting	2 (base + conversion)
Instalment Sale of a Business	Income Shifting	3+ (base + year 1 + year 2)
Changing Filing Status	Demographic Update	2 (base + new status)
Moving States	Demographic Update	2 (base + new state)
Changing Number of Dependents	Demographic Update	2 (base + new count)
Changing Number of Filers Age 65+	Demographic Update	2 (base + new count)

Bracket Management Strategies / Reducing Taxable Income

Qualified Charitable Distributions (QCDs)

Tax-free withdrawals from a Traditional IRA for clients above RMD age, donated directly to eligible charities. Generally more favourable than distributing RMDs, donating separately, and itemising. Limit: $100,000 per taxpayer.

Step 1: Create a base scenario showing normal charitable strategy without QCDs. Enter all Taxable IRA distributions (including RMDs) in the Gross Income section.
Step 2: Enter all charitable donations on Schedule A, line Gifts by Cash or Check (or via the charitable contributions pop-out tab).
Step 3: Duplicate to a new scenario. Determine the QCD amount (up to $100K limit).
Step 4: Subtract the QCD amount from Taxable IRA Distributions in the Gross Income section (because QCDs are not taxable income).
Step 5: Remove the QCD amount from Gifts by Cash or Check on Schedule A (QCDs are not eligible for itemised deduction treatment).
Step 6: Perform and Save Calculations. Compare total tax. Check taxable Social Security and AGI-based credits, which may also be affected.

Where in FP Alpha: Gross Income → Taxable IRA Distributions | Schedule A → Gifts by Cash or Check

Note: If the client itemises, total tax may not change directly, but AGI-dependent items (taxable Social Security, credits) may improve significantly.

Donor Advised Funds (DAFs)

Bundle multiple years of charitable contributions into one tax year via a DAF. Take an immediate deduction in the contribution year and distribute gifts to charities over time. No annual contribution limits. Particularly useful in high-earning years. You need 4 scenarios: (1) Base — Current Giving, (2) Upcoming Year — Current Giving, (3) Current Year — DAF Strategy, (4) Upcoming Year — No Giving (bunched into prior year).

Step 1: Create a base scenario with current year’s normal charitable giving on Schedule A.
Step 2: Duplicate to Scenario 2: adjust the tax year to the upcoming year and enter that year’s normal charitable giving.
Step 3: Duplicate base to Scenario 3: enter the total DAF contribution amount on Schedule A (both years of giving bundled).
Step 4: Duplicate base to Scenario 4: adjust to upcoming year and set charitable giving to zero (already bunched into DAF year).
Step 5: Perform calculations. Compare: (Scenario 1 tax + Scenario 2 tax) vs (Scenario 3 tax + Scenario 4 tax). The DAF strategy often allows itemising in the contribution year and returning to standard deduction the next year.

Where in FP Alpha: Gross Income → Taxable IRA Distributions | Schedule A → Gifts by Cash or Check

Note: Consider contributing highly appreciated investments to the DAF rather than cash for additional capital gains tax savings.

Health Savings Account (HSA) Contributions

Available to clients with high-deductible insurance plans. Three tax benefits: (1) contributions are tax-deductible from gross income, (2) funds grow tax-free, (3) distributions are tax-free if used for qualified medical expenses. Limits: $3,850 individual / $7,750 family, plus $1,000 catch-up at age 55+.

Step 1: Create a base scenario without HSA contributions.
Step 2: Duplicate to a new scenario. Determine the HSA contribution amount.
Step 3: Enter the annual HSA contribution on Schedule 1, Part 2: Adjustments to Income, line HSA Deduction.
Step 4: Perform and Save Calculations. Compare total tax.

Where in FP Alpha: Schedule 1, Part 2: Adjustments to Income → HSA Deduction

Note: Contributions paid through the client’s employer are already excluded from W-2 income. The client cannot take an additional deduction on employer-paid contributions.

401k / 403b Contributions

Pre-tax contributions reduce earned income while saving for retirement. 2023 limit: $22,500 ($30,000 for age 50+). Contributions grow tax-deferred. Pre-tax contributions are not reported on the return — they reduce W-2 income directly.

Step 1: Create a base scenario without the additional contribution.
Step 2: Duplicate to a new scenario. Determine the contribution amount.
Step 3: Reduce the W-2 Wages line in Gross Income by the contribution amount.
Step 4: Perform and Save Calculations. Compare total tax.

Where in FP Alpha: Gross Income → W-2 Wages, Salary, Tips (reduce by contribution amount)

Note: 401k/403b contributions are already factored into W-2 income, so you’re modelling the impact of an additional or increased contribution by further reducing wages.

SEP / SIMPLE IRA Contributions

SEP: employer-funded, limit is lesser of 25% of compensation or $66,000 (2023). SIMPLE: employer + employee contributions, employee limit $15,500 ($19,000 age 50+) with required employer match up to 3%. Both grow tax-deferred.

Step 1: Create a base scenario without the SEP/SIMPLE contribution.
Step 2: Duplicate to a new scenario. Determine the contribution amount.
Step 3: Enter the contribution on Schedule 1, Part 2: Adjustments to Income, line SE SEP, SIMPLE and Qual. Plans.
Step 4: Perform and Save Calculations. Compare total tax.

Where in FP Alpha: Schedule 1, Part 2: Adjustments to Income → SE SEP, SIMPLE and Qual. Plans

Traditional IRA Contributions

Contributions grow tax-deferred and are deductible if the client is not covered by an employer retirement plan. No income cap on making contributions. 2023 limit: $6,500 ($7,500 age 50+).

Step 1: Create a base scenario without the IRA contribution.
Step 2: Duplicate to a new scenario. Determine the contribution amount.
Step 3: Enter the contribution on Schedule 1, Part 2: Adjustments to Income, line IRA Deduction.
Step 4: Perform and Save Calculations. Compare total tax.

Where in FP Alpha: Schedule 1, Part 2: Adjustments to Income → IRA Deduction

Realising Capital Losses (Tax-Loss Harvesting)

Sell investments at a loss to offset gains or deduct up to $3,000/year against ordinary income. Losses can be carried forward indefinitely. Particularly useful in market downturns.

Step 1: Create a base scenario without realised losses.
Step 2: Duplicate to a new scenario. Determine the expected loss amount.
Step 3: Enter estimated short-term and long-term losses in Gross Income → Long-Term Capital Gain/Loss and Short-Term Capital Gain/Loss lines. The tool auto-calculates the net.
Step 4: Perform and Save Calculations. Compare total tax.

Where in FP Alpha: Gross Income → Long-Term Capital Gain or Loss | Short-Term Capital Gain or Loss

Realising Capital Gains

Strategically sell appreciated assets in low-income years or in years with offsetting losses. Useful for clients in retirement or between jobs with temporarily reduced income.

Step 1: Create a base scenario without realised gains.
Step 2: Duplicate to a new scenario. Determine the expected gain amount. Adjust any expected income changes in the new scenario.
Step 3: Enter estimated gains in the Long-Term and/or Short-Term Capital Gain/Loss lines in Gross Income.
Step 4: Perform and Save Calculations. Compare total tax.

Where in FP Alpha: Gross Income → Long-Term Capital Gain or Loss | Short-Term Capital Gain or Loss

Tax-Aware Investing

Model the tax savings of moving a client’s taxable portfolio to more tax-efficient holdings. Compare the historic capital gains, dividends, and interest against the projected payouts of the recommended portfolio.

Step 1: Create a base scenario with the client’s actual historic capital gains, dividends, and interest.
Step 2: Duplicate to a new scenario. Determine average capital gain, dividend, and interest payout on the recommended tax-aware portfolio.
Step 3: Enter the new portfolio’s projected payouts on the Long/Short-Term Capital Gain or Loss line, Taxable Interest, and Qualified/Ordinary Dividend lines. If the client had existing gains on the return, clear the Capital Gain or Loss line first, click Refresh, then enter new amounts.
Step 4: Perform and Save Calculations. Compare total tax.

Where in FP Alpha: Gross Income → Long-Term Capital Gain or Loss | Taxable Interest | Qualified/Ordinary Dividends

Note: If the client’s current portfolio has large embedded capital gains, the tax cost of selling to switch may outweigh the annual savings from the more efficient portfolio. Always model both sides.

Income Shifting Strategies

Roth Conversion

Transfer assets from a Traditional IRA to a Roth IRA, accelerating the tax that would eventually be owed. Lowers future RMDs. Useful when the client is in a lower bracket now than expected in retirement, has a low-earning year, or wants to pass Roth assets to heirs.

Step 1: Create a base scenario without the Roth conversion.
Step 2: Duplicate to a new scenario. Determine the conversion amount.
Step 3: Enter the conversion amount in Gross Income → IRA Distributions.
Step 4: Perform and Save Calculations. Compare total tax. Check bracket impact, taxable Social Security, and AGI-based credits.

Where in FP Alpha: Gross Income → IRA Distributions

Note: The Tax Projector shows the near-term tax cost of the conversion. Navigate to the Roth Conversion Simulator to see the long-term benefit over the client’s lifetime. If moving forward, the client should consider quarterly estimated tax payments.

Installment Sale of a Business

Spread the capital gain from a business sale across multiple tax years to reduce total capital gains tax. Cannot be elected if the sale resulted in a loss. Requires 3+ scenarios to model both years.

Step 1: Create a base scenario showing the full business gain recognised in one year.
Step 2: Duplicate to Scenario 2: enter only the first year’s instalment gain amount in Long-Term Capital Gain or Loss.
Step 3: Duplicate to Scenario 3: adjust tax year to the second year and enter the remaining gain amount.
Step 4: Clear any pre-existing gains from the Capital Gain or Loss line first, click Refresh, then enter the new amounts in the Long-Term or Short-Term lines.
Step 5: Perform and Save Calculations. Compare: total tax in the single-year scenario vs combined tax across the instalment years.

Where in FP Alpha: Gross Income → Long-Term Capital Gain or Loss | Summary of Information → Tax Yea

Note: Keep in mind income tax brackets, taxable Social Security, and AGI-based credits when advising. Quarterly estimated tax payments may be needed in both years.

Demographic Updates

These four strategies model life changes that affect the client’s tax profile. All follow the same pattern: create a base, duplicate, change the demographic field in Summary of Information, and compare.

Strategy	What to Change	When to Use
Changing Filing Status	Summary of Information → Filing Status dropdown (Single, MFJ, MFS, HoH, Qualifying Widower)	Divorce, marriage, custody changes, or when the client may qualify for more than one status and you want to compare which is more beneficial.
Moving States	Summary of Information → State line	Client is considering relocating or has the option to file in more than one state. Compare State Standard Deduction, State Personal & Dependency Exemption, State Marginal Tax Bracket, and Total State Tax Owed/Refunded.
Changing Number of Dependents	Summary of Information → # of Dependent Filers	New child, adoption, or taking on care of qualifying relatives. Note: FP Alpha counts children under 22 using birthdays from the General Questionnaire, not from the tax return.
Filers Age 65 or Older	Summary of Information → # of Filers Age 65 or Older	Client or spouse turning 65. Standard deduction increases at both state and federal levels. May qualify for Elderly or Disabled Tax Credit and additional state credits.

Universal Tips for All Strategies

Always use “Duplicate in new scenario” to preserve your base.

Never modify the base scenario directly. The Quick Fill option creates an exact copy that you can adjust without losing the comparison baseline.

Remember to adjust the Tax Year when modelling future years.

For DAFs, installment sales, and any multi-year comparison, navigate to Summary of Information → Tax Year and change it in the new scenario.

Check AGI-dependent items after every calculation.

Income tax brackets are the primary output, but taxable Social Security, AGI-based credits, and IRMAA thresholds can all shift with even small income changes. Review the full results, not just the total tax line.

Clear existing gains before entering new ones.

If the uploaded return had capital gains/losses, clear the Capital Gain or Loss line first, click Refresh, then enter your new amounts in the Long-Term or Short-Term sub-lines.

Use the Tax Projector for near-term detail, the Roth Simulator for lifetime view.

The Projector answers “what happens to this year’s taxes?” The Simulator answers “should we convert, how much, and over how many years?” Use both together for Roth conversion clients.

Model Roth conversions in both tools.

Start with the Roth Simulator to determine the optimal conversion amount, then model that specific amount in the Tax Projector to check for phase-out traps, IRMAA spikes, or Social Security taxation triggers.

Ready to model a strategy for a client?

Upload a tax return, navigate to the Tax Projector, and follow the step-by-step guide for any of the 16 strategies.

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Disclaimer: Information provided is for educational purposes. Your advisor does not provide tax, legal, or accounting advice. In considering this material, you should discuss your individual circumstances with professionals in those areas before making any decisions.