When you finish out the year with a little strategic tax planning, you’ll be in a great position for January. Most taxpayers are able to utilize a few key tips to ethically save the most money possible. Consider these ideas with your tax planner to give yourself a real leg up!
EOY Tax Savings Strategies
When it comes to managing your tax return, every dollar counts—and good organization definitely pays off. Putting your money in the right accounts and finetuning your year-end earnings will help you have a smoother process once the official tax season begins.
1. Contribute to retirement plans.
You only have a few more weeks this year to make your qualified contributions to IRAs and 401(k) accounts. Doing so will work to lower your annual taxable income. Being proactive with your retirement planning matters a lot for your peace of mind. You can also use this time to verify the contribution limits for the coming year. There’s a chance you’ll want to adjust your plan to reduce other tax obligations down the road.
2. Manage your charitable donations.
If you decide to check your total deductions before the year ends, you might be able to take action for bigger tax savings. Your charitable donations can be applied in a number of ways, including appreciated stocks or even non-cash items, like an automobile or other goods. For some individuals, making plans to donate more this year instead of next year may actually be the best strategy for your tax preparations. It’s all about doing a careful analysis.
3. Review investment losses and gains.
Your net losses will be used against your net gains. But there’s also a set dollar amount of capital losses that you can use to lower your regular income, as long as they exceed your gains. Looking at these numbers now can help you decide whether you need to employ additional tax savings strategies in the coming weeks.
4. Take your retirement account distributions.
Individuals of a certain age and older are required to take distributions each year. In order to avoid a penalty, you’ll need to make sure you’re on track to meet those minimums. You may also need to consider your tax deferred accounts. Sometimes it’s better to take distributions even when you aren’t yet in need of the money. Just remember, staying efficient and compliant with the regulations often requires some professional guidance.
5. Run the numbers for financial gifts.
The end of the year is a wonderful time to support and celebrate the people you love. Whether that means contributing to a child’s 529 college savings account or giving some holiday cash to family, checking the current tax rules in advance will help make sure you won’t get any surprises in the new year when you file your return.
If you need help with your tax planning, know that NSO and Company is here to help! We love working with clients all throughout the year, not just during the busy tax season. By getting your finances situated now, you’ll be able to feel better about ringing in the new year. Let’s make sure you’re on track for success. Please call us to get your next meeting scheduled: (317) 588-3131