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How I Think About Beating the IRS Without Breaking the Rules

Written by Dennis Coon | Oct 22, 2025 11:30:00 AM

When most people talk about “beating the IRS,” they imagine loopholes, secret tricks, or someone ending up on the wrong side of an audit. That’s not what I mean.

To me, “beating the IRS” means using the rules better than most people do. The code is public. The IRS expects you to take advantage of it. You just have to know which levers to pull and when.

After more than twenty years in financial planning, I’ve come to see the tax code not as a wall, but as a roadmap. The rules are written for everyone. But the people who study them, apply them early, and stay flexible are the ones who keep more of what they’ve earned.

No One Likes Them, But They’re Not the Enemy

The IRS’s job is to collect what’s owed. Your job is to make sure you don’t pay a dollar more than that. There’s no trophy for overpaying taxes, and there’s nothing shady about being efficient.

I like to think about it like the way the old Boston Celtics used to play at the Garden. Back in the 1980s, when Larry Bird and his teammates were winning championships, that old parquet floor had a few dead spots—places where the ball wouldn’t bounce quite right.

The Celtics knew exactly where those spots were. Visiting teams didn’t. In tight games, Boston players would subtly steer opponents toward those areas or avoid them when it mattered most. It wasn’t cheating; it was home-court awareness. They knew their environment better than anyone else.

That’s what smart tax planning is. The tax code is the same floor we all play on, but if you know where the “dead spots” are—where the rules bend or bounce differently—you can move more confidently and come out ahead. Knowledge and preparation, not luck or loopholes, make the difference.

See… They’re Not So Bad

Here’s a fun fact: the heart of the entire tax system boils down to a single sentence—“All income, from whatever source derived, is taxable unless specifically excluded by law.” That’s it. That’s the rule.

Every other page in the tax code—thousands of them—is about the exceptions. It’s Congress spelling out how and when you can legally reduce, defer, or avoid taxes altogether.

That’s not a mistake or a loophole. It’s deliberate design. The government uses the tax code to encourage certain behaviors: saving for retirement, giving to charity, investing in education, or putting capital at risk in the economy.

So if you’re following those incentives, you’re not working around the system—you’re working with it.

Four Ways Savvy Retirees Do It

1. Control the Timing of Income

One of the biggest levers retirees have is when they recognize income.

Roth conversions, capital-gain harvesting, and withdrawal sequencing are all about timing—choosing the right year to pay the least amount of tax. Done thoughtfully, this can reduce your lifetime tax bill by hundreds of thousands of dollars.

2. Use the Code’s Built-In Incentives

The tax code isn’t all punishment. It actually rewards certain behaviors: charitable giving through Qualified Charitable Distributions (QCDs), funding Health Savings Accounts (HSAs), or using 529 plans that can later roll to a Roth IRA.

When you align your financial life with the incentives Congress built into the system, you don’t have to fight the IRS—you work with it.

3. Own the Order

The order in which you draw from your accounts can make or break your after-tax income.

Do you tap taxable accounts first, or IRAs? Sell from your IRA when rebalancing, or your brokerage account?

There’s no one-size-fits-all answer, but the principle is simple: every dollar has a different tax cost. Knowing which pocket to pull from, and in what sequence, can quietly save you more than chasing the next market winner.

4. Stay Flexible and Start Early

The rules change constantly. Congress updates the tax code every few years, and new opportunities come and go. That’s why tax planning isn’t a one-time project, it’s an ongoing process.

I’ve seen retirees build great plans in their 60s, only to see them fall apart later because they didn’t adapt. I’ve also seen others wait too long to get started. One client took a couple of years to decide whether to act. By the time he did, several powerful strategies were off the table.

It wasn’t a lack of discipline; it was simply timing. Every year you delay, the IRS quietly closes a few more doors. The earlier you start, the more choices you have.

What Most People Miss

Tax preparation and tax planning aren’t the same thing.

Preparation looks backward. It records what’s already happened. Planning, on the other hand, looks forward. It shapes what happens next.

The IRS doesn’t reward tidy paperwork. It rewards foresight.

So, if you’re thinking about taxes only at filing time, you’re already playing catch-up.

None of this is about gaming the system. It’s about being intentional. Using the same rulebook as everyone else, but playing the game  a little smarter. You’ve worked hard for your money. The least you can do is make sure you keep as much of it as the rules allow.