Year-End Tax-Saving Tips & Strategies

Year-end tax planning and investment decisions can result in significant tax savings. The following are some common planning strategies that you can consider.

  • Recognize income when your tax bracket is lower.
  • Pay deductible expenses when your tax bracket is higher.
  • Postpone payment of tax when possible.

Year-End Tax Planning

Let’s look at how to implement some of these planning strategies:

In a Lower Tax Bracket?

If you are in a low tax bracket you may want to recognize income to utilize deductions that would otherwise be lost or simply take advantage of the lower tax brackets. Consider accelerating income by taking retirement distributions before the end of the year or converting a traditional IRA to a Roth IRA. You could also consider selling investment securities to generate capital gains.

In a Higher Tax Bracket?

When you are projected to be in a high tax bracket you may want to look at paying deductible expenses in that same year to lower your taxable income. You can do this by increasing your itemized deductions or even doubling up on them. For example, you can pay your property taxes, an extra mortgage payment or accelerate payment of your medical expenses before the end of the year. You can also make charitable contributions to qualified organizations. Consider making those charitable gifts using appreciated securities which you have held for 12 months or more to avoid paying capital gains tax on the appreciation.

Other Tips

If your tax bracket isn’t changing, consider taking advantage of deferring income, such as year-end bonuses or collection of income. Finally, make sure you are taking full advantage of retirement saving vehicles such as 401(k) plans or IRAs.

It is always a good idea to consult your tax advisor when employing any of these strategies. A little planning can make a big difference!

 

Hewins Financial Advisors, LLC d/b/a Wipfli Hewins Investment Advisors, LLC (“Hewins”) is an investment advisor registered with the U.S. Securities and Exchange Commission (SEC) under the Investment Advisers Act of 1940. Hewins is a proud affiliate of Wipfli LLP. Information pertaining to Hewins’ advisory operations, services and fees is set forth in Hewins’ current Form ADV Part 2A brochure, copies of which are available upon request at no cost or at www.adviserinfo.sec.gov. The views expressed by the author are the author’s alone and do not necessarily represent the views of Hewins or its affiliates. The information contained in any third-party resource cited herein is not owned or controlled by Hewins, and Hewins does not guarantee the accuracy or reliability of any information that may be found in such resources. Links to any third-party resource are provided as a courtesy for reference only and are not intended to be, and do not act as, an endorsement by Hewins of the third party or any of its content or use of its content. The standard information provided in this blog is for general purposes only and should not be construed as, or used as a substitute for, financial, investment or other professional advice. If you have questions regarding your financial situation, you should consult your financial planner, investment advisor, attorney or other professional.
Amy Libertoski
Amy Libertoski

CPA, PFS | Principal, Senior Financial Advisor

Amy Libertoski, CPA, PFS, is a Principal and Senior Financial Advisor with Wipfli Hewins Investment Advisors in Wausau, WI. Bringing 20 years of experience in the financial services industry, Amy specializes in financial, estate and retirement planning for families, as well as tax planning and preparation for high-net-worth investors.

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Year-End Tax-Saving Tips & Strategies

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