Year-End Tax Planning Tips

As we begin our countdown to 2024, it is a great time to ensure your year-end tax plan is in place. Tax planning is a vital component of meeting your overall financial goals. Our team of professionals is here to assist with your financial and tax planning needs. 

Below we summarize tips for you to consider before the clock strikes midnight on December 31st.

Maximize your 401K and IRA contributions: 

Take advantage of the tax benefits and potential company match in your retirement account(s). This “free” money over time can have a significant positive impact on your overall retirement savings.

Roth Conversions: 

If you have a traditional IRA, consider a Roth Conversion. This may be a good option if you experienced an extraordinary financial loss or low income this year.

“Bunching” of charitable giving: 

Do good for others, while also benefiting your own tax situation. Accelerate charitable donations to allow for itemization vs. taking the standard deduction. Think about charities you would like to support and use these donated funds to earn a tax deduction on your next tax bill.

Use of donor advised funds (DAFs):

Like a charitable investment account, a Donor Advised Fund allows you to provide cash, securities, or other assets to a charity of your choice and immediately receive a tax deduction.

Donate Appreciated Securities: 

Possibly reduce a capital gains tax and donate stock to your favorite charity instead of donating cash.

Loss/Gain Harvesting: 

Chances are you have seen both gains and losses in your portfolio this year. Loss and gain harvesting allow you to realize tax benefits from these fluctuations.

Health Savings Account (HSA): 

Consider a Health Savings Account if you do not already have one in place. The tax benefits of this account are the triple crown of tax savings.

Withholding planning for bonuses and IRA distributions: 

Look at your anticipated tax payment and year-to-date withholdings. This might be the time to consider an adjustment.

Qualified Charitable Distributions: 

Consider donating your IRA Required Minimum Distribution directly to charity. This may allow you to exclude the distribution from your taxable income.

Utilize Solo 401k, SEP-IRA, or Simple IRAs if self-employed: 

Whether you are an owner-only business with no employees or have up to 100 employees, there is an option for your particular situation that can be easily administered with the help of your advisor. 

Wealth transfer opportunities: 

Review asset inventory to determine if you are expected to have taxable estate. If so, consult your advisor on strategies to reduce the value of your taxable estate such as utilization of your exemption, direct payment of medical & educational expense, gifts to 529 plans and the use of irrevocable life insurance trusts.

Beware of stock options impact on tax: Review your stock options to ensure they are not having an unnecessary negative impact on your tax plan.

Passive activity loss rules: 

Do you own a rental property? Remember that passive losses are only deductible against passive gains. If you don’t have any passive income, these losses get carried into future years.

Tax Efficient Investing / Tax Diversification: 

Are you currently invested in tax-smart accounts? This is a good time to look at your holdings and determine if they are tax efficient.

Please note, not all the tips above may be applicable to your particular situation. To learn more about any of these tips, listen to our year-end tax planning webinar or call us and we’ll be happy to help. You can access the webinar recording here.


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