End-of-Year Tax Planning Tips to Consider - Adviser Investments

End-of-Year Tax Planning Tips to Consider

November 25, 2019

Thanksgiving around the corner means that the year is nearly over, so we’re outlining five end-of-year tax planning tips to consider before the calendar flips to 2020.

  1. Take Advantage of Charitable Deductions: If you can lower your taxes by taking deductions in 2019, charitable contributions are a popular way to go. Click here for our podcast on the topic, and our discussions of “bunching” contributions and as well as other smart charitable giving strategies from earlier this month.
  2. “Harvest” Any Losses: Losing money isn’t fun, but there is a silver lining to selling an investment at a price below what you purchased it for—a lower tax bill. You can use losses to offset gains you’d otherwise owe taxes on from other parts of your portfolio. And if your losses are greater than your gains, you can count $3,000 against your ordinary income in that year. If you still have losses beyond that, they will be carried forward to future years. Plus, after 30 days you can always buy back what you sold at a loss.
  3. Contribute to Retirement Accounts: Review what you’ve already contributed to your retirement accounts so far this year—think 401(k)s, traditional IRAs, Roth IRAs, SEP IRAs and health savings accounts. If you haven’t hit your limits and have cash available, it’s a great opportunity to potentially help minimize your tax bill while investing for your retirement.
  4. Use Your Flexible Spending Account (FSA): If you have one, check the balance of your FSA. Pre-tax dollars contributed for health care expenses do not roll over every year—use it or you lose it. So, confirm your deadline for spending and start strategizing on how to use that cash. Are there any medical supplies you can stock up on? Do you have any receipts from doctor’s appointments that you could submit for reimbursement?
  5. Know Your Minimum IRA Distributions: By April 1 following the year you turn 70½, you must begin taking required minimum distributions (RMD) from traditional IRAs and 401(k)s. After that first RMD, all future withdrawals must be taken by December 31 to avoid penalties.

Tax planning varies from situation to situation—and is cloaked in jargon and acronyms—so make sure to confer with your CPA or your Adviser Investments portfolio team if you have any end-of-year tax planning questions. We’re here to help.


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