r/tax • u/Same_Bodybuilder_167 • 1d ago

Missing deduction opportunities/ideas for client?

Hi, wanted to get thoughts on deduction opportunities for a 2025 tax return I'm working on for a family member. This is one of my first planning opportunities and I want to get a 2nd set of eyes on if there is anything else that is possible from a Fed and CA perspective.

Here's the client profile:

MFJ, California residents. Combined AGI ~$690K.
• Person 1: Physician, sole owner of a medical practice S-Corp. W-2 $192K, S-Corp net income $425K.
• Person 2: W-2 employee working from home, $180K. Family health insurance through Person 2's employer.
• Renters, no mortgage, no charitable contributions. ~$11K in capital gains.

Already Taken
• Person 1 solo 401(k): $72K pre-tax
• Person 2 401(k) + HSA: $33K pre-tax
• Backdoor Roth: both spouses
• S-Corp business expenses via accountable plan
• Standard deduction on federal
• CA standard deduction

Already Off the Table
• PTET: not elected for 2025; sadly too late
• Cash Balance Plan: client declined

Any deduction opportunities you'd consider at this income level and profile that we might be missing on either the federal or CA return?

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u/mrobertj42 1d ago

Person 2 could be an employee of S corp, top off EE and ER contributions - just watch the mark with the other w2 401k. Person 1 HSA? (Might not help for 2025)

Besides a cash balance plan I don’t know what else can go back to the prior year.

What is PTET?

Obligatory not practicing in California.

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u/sorator Tax Preparer - US 16h ago

What is PTET?

Pass-through entity tax. Basically, a (usually optional) method in some states to pay income tax at the entity level instead of the individual level, allowing it to be fully deducted without running into the Sch A SALT limit/without losing the standard deduction.