End-Of-Year Tax Items

Read below for tax items to consider at year end…

​Retirement Account Contributions
You have until December 31st to make all employee 401k, 403b, 457 account contributions, as well as FSA deposits. Consider applying all surplus funds to these accounts, subject to annual limits, which you can view on our Tax & Financial Data form (see pg 2).
 
For HSA’s and IRA’s, you have until the April 15th tax filing deadline in 2024 to make final contributions.
 
Charitable Donations
Deductions on the 2023 tax return are limited to donations made in the 2023 tax year. Be sure to finalize all giving by the end of the year if you plan on itemizing with your tax return.
 
Individual Gifts 
Be sure to finalize any gifts you plan on making to individuals that fit under the annual exclusion. For 2023 you can give up to $17,000 to any individual without needing to report the transaction on a gift tax return. Click here for more info on tax rules regarding gifts.
 
Deduction Bunching
While the tax changes from 2018 are still in effect, you may want to look at bunching your deductions if you’re teetering the line between itemizing and taking the standard deduction. Bunching essentially means lumping itemized deductions in one year to alternate taking the standard deduction and itemizing. This is generally done by contributing multiple years’ worth of donations in one year to exceed the itemization limits, as well as using the current year for making the January mortgage payment and following year property tax payment. This “bunches” deductions in order to maximize your tax impact over a 2-year period.
 
Roth Conversion
If you feel your tax rate will be higher in retirement than now, or you’re having a particularly low income year, it may make sense to convert some Traditional IRA funds over to a Roth IRA. Check with your financial advisor and/or tax preparer before employing this strategy, due to the multiple implications involved.
 
RMD’s
You generally must take “Required Minimum Distributions” (RMD’s) when you reach age 72 (73 if you reach age 72 after 12/31/2022). Failing to take accurate withdrawals can result in penalties. Visit our website at this link for more on RMD’s. Be sure to also checkout our RMD Strategy article.
 
The end of each year is also a great time to visit all your financial priorities, such as updating your will/trust and assessing insurance policies. Here are some ideas to consider - click here.
 
Feel free to reach out should you have questions for your particular situation!