Many people think of the end of the year as a time for reflection and celebration — a time to look back on all the fun times had, the accomplishments made and all the good yet to come, as well as consider how to improve and better oneself in the year ahead.
There’s also no better time to reflect on past financial choices and prepare for the upcoming tax season. Getting organized now can ensure you’re ready to take advantage of any potential benefits by April and will ensure you’re not scrambling to gather any information at the last minute.
In terms of year-end tax strategies, the members of Kiplinger Advisor Collective have six key recommendations to make that will not only better prepare you for your 2024 taxes but will also make sure you end the year in a smart, thoughtful way.
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Check for losses in your accounts
“Look through your accounts and see if you have any losses. If you notice any, think about doing tax-loss harvesting. A common misconception is that you're not allowed to purchase a similar investment right away, but you are. You're just not allowed to purchase the identical investment. If you sell a stock, you could buy a placeholder. Then, after 30 days, repurchase the original stock.” — Michael Gainor, Wells Fargo Advisors
Review and maximize your retirement contributions
“Contributing the maximum allowable amount can significantly reduce your taxable income while building for your future as well. It's a simple yet impactful way to close out the year on a smart financial note. Making this a habit can help in setting you up for future success.” — Bob Chitrathorn, Wealth Planning By Bob Chitrathorn of Simplified Wealth Management
Kiplinger Advisor Collective is the premier criteria-based professional organization for personal finance advisors, managers, and executives. Learn more >
Look at tax projections with your adviser
“Review tax projections with your adviser to see if any of the following make sense: Roth conversions, tax-loss or -gain harvesting, charitable giving or bunching, HSA contributions and planning around taxable interest impacts with rates being higher than they have been in years past. These items can help clients lower both their year-to-year and lifetime tax bills.” — Doug Oosterhart, LifePoint Planning
Defer income to 2025
“To end the 2024 tax season smartly, review your taxes with an adviser. Maximize retirement contributions, consider tax-loss harvesting and assess charitable contributions or Roth conversions. If you’re nearing income thresholds, defer income to 2025 to stay in a lower tax bracket. These strategies, combined with organizing records, can reduce taxes, boost savings and set a solid foundation for next year.” — Amrita Choudhary, Wasabi Technologies
Consider tax-loss harvesting for underwater assets
“If you have assets that are underwater, talk to your accountant about tax-loss harvesting. You can sell those assets you no longer care about for a loss and then deduct that loss from your capital gains in your other net positive gain assets in your annual tax return.” — Zain Jaffer, Zain Ventures
Get a clear understanding of where you stand
“Skip the last-minute scramble in tax season. Instead, consider year-end tax projections with your adviser to see where you stand. This simple step reveals your options to lower taxes, improve take-home pay and make smart moves while they’re still on the table.” — Dennis McNamara, wHealth Advisors
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Disclaimer
The information provided here is not investment, tax or financial advice. You should consult with a licensed professional for advice concerning your specific situation.
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