Year End Tax Planning


One of the many “value added” services we provide to our Wealth Management clients is year-end tax planning. We look for opportunities to make strategic moves before the end of the tax year that can help mitigate the amount of taxes due. This becomes especially important in a year where the top marginal tax rate could be as high as 43.4%.

Some of the opportunities we are now reviewing for our clients include, but are not limited to, the following:

  • We review our Wealth Management client’s total capital gains and losses realized to date. If a client is projected to have net capital gains, we will consider harvesting losses to offset those gains to the extent there is a tax benefit.
  • We evaluate the benefit of harvesting gains for clients in the 10% or 15% tax brackets, which presents a unique opportunity to trigger gains taxed at a preferential 0% tax rate. This may apply to our client’s children or retired parents.
  • Business owners who expect to have an overall loss from their business, may have an opportunity for some very impactful tax planning involving their retirement accounts. Hint: Roth Conversions.
  • For those who find themselves subject to the Alternative Minimum Tax (“AMT”), one consideration would be accelerating ordinary income to be taxed at either 26% or 28% as opposed to the higher ordinary income tax rates of 33%, 35% or 39.6%, if applicable.
  • For clients who itemize deductions (state income taxes, real estate taxes, charitable contributions, etc.) and get an overall tax benefit, we will consider accelerating additional deductions to the current tax year.
  • To the extent possible, we would strongly recommend our clients maximize contributions to employer provided retirement accounts. They might be able to “true-up” contributions with the remaining pay periods or with a year-end bonus. The maximum that can be contributed to an employer plan (i.e. 401K plan) is $18,000 (or $24,000 if you are 50 or older).
  • For clients who will have self-employment income for the first time, we will review the benefits of establishing and funding a retirement plan to reduce the taxable income from the activity.
  • Many clients are interested in making gifts to their children. Now is the time where we would evaluate the amount of gifts already made to those beneficiaries and consider making an additional gift before year-end to take advantage of the annual exclusion for gifts of $14,000.

If you have any questions about the planning opportunities listed above, please reach out to your Tobias Financial Advisor financial advisor. We would be happy to discuss these opportunities with you and whether they apply to you.

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