Things We’ve Been Asked

September 27, 2023

What year-end tax planning topics should I consider?

  1. Maximize Retirement Contributions:
    • Maximize your retirement plan contributions to reduce your taxable income, alternatively, consider Roth contributions, which are made with post-tax funds.
  2. Review and Adjust Tax Withholdings:
    • Align your tax withholding and quarterlies with your financial situation to prevent under or over-payment of taxes.
  3. Itemize Deductions if Beneficial:
    • Consider itemizing deductions like mortgage interest, state taxes, medical expenses, and the bunching of charitable contributions in alternate years if they exceed the standard deduction.
  4. Utilize Tax Credits:
    • Explore tax credits like the Child Tax Credit, Earned Income Tax Credit, EV, Solar, and education credits for direct reductions in your tax bill.
  5. Contribution to Health Savings Accounts (HSAs):
    • If eligible, contribute to HSAs to enjoy triple tax benefits-contributions are tax-deductible, grow tax-free, and withdrawals for medical expenses are tax-free.
  6. Manage Capital Gains and Losses:
    • Review investments and consider selling those with losses to offset gains, minimizing your tax liability.
  7. Plan Gifting Strategically:
    • Utilize the annual gift tax exclusion of $17,000 ($34,000 for married couples) per beneficiary to trim your taxable estate while benefiting your loved ones.
  8. Consider Creating Charitable Remainder Trusts (CRTs) or Donor-Advised Funds (DAFs):
    • CRTs let you donate to a charity while retaining an income stream for yourself or beneficiaries.
    • DAFs provide flexibility in charitable giving, offering immediate tax deductions and allowing you to recommend grants to charities over time.