End-of-Year Tax Planning Tips to Consider

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 IRAA type of account in which funds can be saved and invested without being subject to tax until the account holder reaches retirement age. Distributions: By April 1 following the year you turn 70½, you must begin taking required minimum distributions (RMD)A required minimum distribution is the amount of money that must be withdrawn each year from tax-deferred retirement accounts once the beneficiary reaches retirement age (72, according to IRS rules). from traditional IRAs and 401(k)s. After that first RMDA required minimum distribution is the amount of money that must be withdrawn each year from tax-deferred retirement accounts once the beneficiary reaches retirement age (72, according to IRS rules)., all future withdrawals must be taken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.

About Adviser Investments

Adviser is a full-service wealth management firm, offering investment management, financial and tax planning, managed individual bond portfolios, and 401(k) advisory services. We’ve been helping individuals, trustsA legal document that functions as an instruction manual to how you want your money managed and spent in your later years as well as how your assets should be distributed after your death. Assets placed in a trust are generally safe from creditors and can be sold by the trustee in short order, avoiding the lengthy and costly probate process., institutions and foundations since 1994. Adviser Investments and its subsidiaries have over 5,000 clients across the country and over $8 billion in assets under management. Our portfolios encompass actively managed funds, ETFsA type of security which allows investors to indirectly invest in an underlying basket of financial instruments (these may include stocks, bonds, commodities or other types of instruments). Shares in an ETF are publicly traded on an exchange, and the price of an ETF’s shares will fluctuate throughout the trading day (traditional mutual funds trade only once a day). For example, one popular ETF tracks the companies in the S&P 500, so buying a share of the ETF gets an investor exposure to all 500 companies in the index., socially responsible investments and tactical asset allocation strategies, and we’re experts on Fidelity and Vanguard mutual funds. We take pride in being The Adviser You Can Talk To. To see a full list of our awards and recognitions, click here, and for more information, please visit www.adviserinvestments.com or call 800-492-6868.