Summary

Year-End Tax Planning: Maximize Your Finances Before the Clock Strikes Midnight

Dec. 01, 24

This blog highlights tax strategies to implement at year end. Including managing capital gains and losses to minimize tax impact, meeting required minimum distributions to avoid penalties, maximizing retirement contributions for tax advantages, and leveraging charitable giving for tax deductions. These tips provide actionable insights to help you save on taxes, grow wealth, and achieve financial confidence as you step into the new year.

As the year comes to an end, it’s an excellent time to review and optimize your financial plan. Here are some year-end tax planning strategies to ensure you’re financially set for the new year:

Manage Capital Gains and Losses

Tax loss Harvest: Offset capital gains by selling underperforming assets to realize a loss. This can lower your taxable income.
Review Investments: Align your portfolio with long-term goals while considering tax implications.
Timing is Key: Delaying gains into the next year or accelerating losses into this year can impact your tax burden.

Meet Required Minimum Distributions (RMDs)

Avoid Penalties: Per the IRS, you generally have to start taking withdrawals from retirement accounts (IRA, 401K, ETC) when you reach 72 (73 if you reach 72 after December 31, 2022). Missing this can result in hefty penalties of up to 50% of the amount not withdrawn.
Plan Early: Calculate your RMD and withdraw it before December 31st to avoid last-minute mistakes.

Max Out Retirement Contributions

Boost Your Savings: Maximize contributions to 401(k)s, IRAs, and other retirement accounts to take full advantage of tax benefits.
Catch-Up Contributions: If you’re 50 or older, consider making additional contributions to your retirement accounts.

Strategic Charitable Giving

Donate Appreciated Assets: Giving stocks or mutual funds that have increased in value may allow you to avoid capital gains taxes while claiming a charitable deduction.
Qualified Charitable Distributions (QCDs): If you’re over 70½, you can donate up to $100,000 directly from your IRA to a qualified charity, reducing your taxable income.

Utilizing these strategies can help you save on taxes, grow your wealth, and enter the new year with confidence. Don’t wait until last minute – start your year-end planning today!
Remember to always consult with a financial advisor or tax professional to tailor these strategies to your specific needs.

About the Author:

Thomas Windom is a licensed financial advisor and founder of Ethos Financial Planning, a Registered Investment Advisor with the state of Ohio. Thomas has 9 years of industry experience and holds the series 7 & 66 licenses. He specializes in financial planning, retirement planning, and investment management.

Disclosure:

The information presented in this blog is the opinion of the author and does not reflect the views of any other person or entity unless specified. The information provided is believed to be reliable and obtained from reliable sources, but no liability is accepted for inaccuracies. The information provided is for informational purposes and should not be construed as advice. Advisory services offered through Ethos Financial Planning LLC, an investment adviser registered with the state of Ohio.