A Wild Week on Wall Street: The Tax Planning Moves High Earners Should Make Before the Next Swing

If you watched the market this week and felt your stomach do that little drop thing, you’re not alone.

One day it’s green and everyone acts like the future is settled. The next day, a headline hits, the market slides, and suddenly your portfolio looks like it aged five years overnight. It’s weird how fast you can go from calm to checking your account twice in one morning. I do it too, and I’m not proud of it.

Here’s the part most high earners miss.

A wild week on Wall Street is not just a market story. It’s a tax planning story.

Because swings create choices. Choices create outcomes. And outcomes can be managed when you think ahead. That’s what this post is about.

We’re going to keep this simple and practical. No jargon soup.

You’ll see what to do before the next swing so your money stays more predictable, your tax bill stays less annoying, and your plan doesn’t fall apart the moment the market gets dramatic.

And yes, this ties into 1099 income tax planning, business tax planning, and high-income tax planning in a way that actually makes sense.

Who this is for

This is for you if market swings make you ask one of these questions:

Do I sell and take the loss
Do I hold and hope
Do I buy more
Do I move money to cash
Do I change nothing and pretend I never saw my balance

You don’t need to be a trader. You just need to have money on the line.

This is a good fit if you’re in any of these buckets:

• You’re a high-income W-2 earner with a large taxable brokerage account

• You’re a high-income 1099 earner with uneven income

• You own a business and your cash flow depends on client payments or sales cycles

• You get bonuses, commissions, distributions, or K-1 income that hits in bursts

• You hold concentrated stock from a company, an RSU-heavy comp package, or equity from a sale

If you’re a business owner, you’re often dealing with two moving targets at once:

• Your income moves around

• The market moves around

That combo is where good planning starts to feel like a relief.

If you want a quick reset on the kind of planning that fits high earners, you can skim a broad overview like this physician tax planning guide and then adapt the concepts to your own income setup.

Also, if you’re paid both ways, the split matters. A lot. This breakdown on 1099 vs W-2 tax planning is a clean place to start.

The tax moves that matter when markets swing

Market volatility creates two main tax opportunities.

Not always. Not every week. But often enough that you should have a plan ready.

1) Harvest losses on purpose, not by accident

Tax-loss harvesting is simple in theory.

You sell an investment at a loss.
You use that loss to offset gains.
If you have more losses than gains, you may be able to offset a limited amount of ordinary income too.
Then you carry the rest forward.

The real win is timing.

When the market drops fast, you might see losses in positions that were up last month. That creates a window.

A simple checklist:

• Identify positions with losses

• Check if you have realized gains this year

• Sell the loss position if it fits your plan

• Reinvest in a similar investment to stay allocated

• Avoid the wash sale rule if you’re buying back too soon

This is where people get sloppy.

They wait until December and rush. Or they sell out of panic and never reinvest. Or they accidentally trigger wash sales because their spouse’s account or their automated reinvestment bought the same thing.

If you want fewer mistakes, think of it as an annual system, not a year-end scramble.

And if you’re a business owner with uneven income, this matters even more. Your income can spike in one quarter, and suddenly your bracket looks different than you expected. That’s high-income tax planning in real life. It’s not theoretical.

2) Manage gains like you manage income

High earners often focus on how much they make.

Then they ignore how their gains get taxed. That’s where surprises come from.

Some people sell a position, take a large gain, and then realize they triggered:

• Higher capital gains taxes

• Net Investment Income Tax exposure

• Underpayment penalties because withholding didn’t cover it

• Medicare premium surcharges later on

The practical move is to plan gains the way you plan business income.

• Spread gains across years when possible

• Pair gains with harvested losses

• Use charitable giving when it fits

• Make estimated tax payments on time

If you need a refresher on staying out of penalty trouble, this page on safe harbor rules and IRS penalties for business owners connects the dots in plain language.

Also, if your business is investing in equipment, expansions, or assets, the way you time those purchases can shape your taxable income. This overview on capital expenditures is worth a quick look if you haven’t reviewed your capex strategy in a while.

Common mistakes high earners make in a volatile market

Let’s talk about the stuff that actually goes wrong. Not in theory. In real life.

Mistake 1: You only think about taxes in April

I get it. Taxes feel like a seasonal problem.

But volatility doesn’t wait for tax season.

If you wait until the return is being prepared, you’ve lost most of your options. You can still do a few things, but the bigger levers are gone.

High-income tax planning works best when you keep it close to your cash flow.

Mistake 2: You ignore estimated taxes because your income feels “variable”

This shows up a lot with 1099 income tax planning.

You have a great quarter.
You pay yourself.
You reinvest in the business.
Then you forget the IRS wants its share throughout the year.

Then the market drops, you sell something, and now you’ve created gains on top of high income.

That’s the recipe for a painful surprise.

A quick habit that helps:

• Review income and gains monthly

• Adjust estimated payments quarterly

• Don’t assume last year’s pattern repeats

Mistake 3: Your brokerage account and business plan don’t talk to each other

People run business tax planning and investing like two separate lives.

But they interact.

If your business income is high this year, maybe you:

• Delay certain gains

• Accelerate deductions

• Increase retirement contributions

• Harvest losses more aggressively

If your business income drops, maybe you:

• Realize gains at a lower bracket

• Convert some IRA money to Roth

• Rebalance without as much tax drag

When those decisions are disconnected, you end up paying for it.

Mistake 4: You treat the home office and vehicle stuff as “small”

This one surprises people.

High earners love big strategies. The “small” items get ignored.

Yet for business owners, those details can add up. And they’re usually easier to implement than the fancy stuff.

If you’re unclear on what’s legit, this guide on heavy vehicle and home office tax deductions can help you spot what you may be missing.

Also, if you want a straightforward source of reminders straight from the IRS, their IRS tax tips newsroom page is actually useful in short bursts.

Practical examples you can copy

Examples help because volatility advice can get vague fast. So let’s make it concrete.

Example 1: The high-income 1099 earner with a choppy year

You’re a 1099 professional earning $450,000.
Your income comes in waves.
You also have a taxable brokerage account.

A bad market week hits and your portfolio shows a $40,000 unrealized loss in a tech index fund.

Moves that may fit:

• Harvest $40,000 of losses now

• Use those losses to offset $40,000 of gains from earlier in the year

• If no gains, carry forward losses for future years

• Increase estimated payments if your income jumped this quarter

• Adjust retirement contributions before year-end based on current income

This is 1099 income tax planning with market awareness. You’re not guessing. You’re responding with options.

Example 2: The business owner with a strong year and a planned equipment purchase

You own a business and expect $700,000 of profit this year.
You’re also considering buying new equipment or upgrading systems.

A volatile market week creates a chance to rebalance your portfolio. But selling winners would trigger a large tax bill.

Moves that may fit:

• Time your equipment purchase so deductions land in the same year as gains

• Harvest losses to offset gains from rebalancing

• Review your depreciation options and how they impact taxable income

• Use safe harbor planning so you don’t get hit with penalties

That’s business tax planning that matches your actual reality. High income. Real decisions. Real timing.

Example 3: You had a “good” market year and forgot about taxes until it was too late

This happens when you sell a big position, feel smart, and then get the tax bill later.

Let’s say you sold stock and realized $250,000 in gains.
You didn’t adjust estimates.
You assumed your withholding would handle it.

Moves that would have helped earlier:

• Make a same-quarter estimated tax payment

• Harvest losses if available

• Use charitable giving if it fits your goals

• Spread sales across tax years when possible

This is where a simple planning cadence helps. Even a quarterly review is better than nothing.

If you like structure, I’ve seen people stick to a planning system like quarterly check-ins and yearly targets. This kind of framework can keep you consistent: 10-year target, 3-year picture, 1-year plan, and quarterly rocks. Not tax-specific, but it makes planning feel less chaotic.

FAQs

Is market volatility really a tax planning opportunity?

Sometimes, yes.

Volatility can create losses you can use. It can also force decisions that trigger gains. When you plan for both, you reduce surprises.

You don’t need to trade. You just need to be ready.

What’s the easiest tax move during a market drop?

Loss harvesting is often the most straightforward.

You sell a position at a loss, then reinvest in a similar option to keep your portfolio aligned with your plan.

The key is avoiding wash sales and keeping the strategy intentional.

If I’m a high-income earner, should I avoid selling anything in a volatile week?

Not automatically.

Sometimes selling makes sense because you’re rebalancing or reducing risk. Other times you may wait.

The better question is:

If you sell, do you know what it does to your tax bill
If you don’t sell, do you know what risk you’re keeping

How does 1099 income tax planning change the approach?

1099 income tends to be uneven. That makes estimated taxes and bracket management more sensitive.

When you add market gains or losses on top, planning becomes more valuable.

A simple cadence helps:

• Track income monthly

• Review estimates quarterly

• Coordinate investment moves with business results

What’s one business tax planning move I should review before year-end?

Look at deductions you control and the timing of purchases.

• Equipment and technology purchases

• Retirement plan contributions

• Home office and vehicle deductions

• Entity strategy and payroll planning if you’re structured that way

Small cleanups can lead to real savings, even if they feel boring.

Should I use the IRS website for guidance or rely on my advisor?

Both can work.

The IRS content can help you understand basics and deadlines. Your advisor helps you apply rules to your situation and coordinate moving parts.

If you’re browsing for reminders, start here: IRS tax tips.

Wrap-up

A wild week in the market can feel like noise. It can also be a prompt.

It reminds you that your plan needs flexibility. Your taxes need attention before the deadline pressure hits. And your investment decisions should fit your income reality, not your mood that day.

High-income tax planning is not about predicting the next swing.

It’s about being ready for it.

If you want the next step to feel simpler, start with one move this week:

• Review realized gains and unrealized losses

• Check your estimated tax payments

• Set a quick quarterly planning rhythm

• Identify one tax decision you can control before year-end

Then talk with your tax advisor and map the next few months. Not twelve months. Just the next few.

That alone can change how the next market swing feels when it shows up.