What year-end tax planning topics should I consider?
- Maximize Retirement Contributions:
- Maximize your retirement plan contributions to reduce your taxable income, alternatively, consider Roth contributions, which are made with post-tax funds.
- Review and Adjust Tax Withholdings:
- Align your tax withholding and quarterlies with your financial situation to prevent under or over-payment of taxes.
- 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.
- 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.
- 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.
- Manage Capital Gains and Losses:
- Review investments and consider selling those with losses to offset gains, minimizing your tax liability.
- 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.
- 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.