Year-End Tax Tips
As we approach the end of the year, it’s the perfect time to make some strategic moves that may help to reduce your tax bill and enhance your potential for long term wealth growth. Here are some key year-end tax planning tips to keep in mind.
- First, max out your retirement accounts. Contributing the maximum to your 401(k) or IRA not only helps your future self but can also lower your taxable income for the year.
- Next, if you’ve had any realized capital gains this year, consider offsetting those by recognizing losses. This can reduce your taxable income—a common strategy known as tax-loss harvesting.
- Year-end giving is another powerful tool. By making donations before December 31st, you could benefit from a deduction this tax year. You might also consider a Donor-Advised Fund, which allows you to donate now and decide later where to give.
- For those over 70½, a Qualified Charitable Distribution, or QCD, is a smart way to use your Required Minimum Distribution to support causes you care about without adding to your taxable income.
- And finally, a Roth conversion paired with a Donor-Advised Fund contribution can be a powerful combination. You’ll convert pre-tax traditional IRA dollars to a Roth IRA while separately funding charity. This donation may serve to balance the tax consequence of the IRA conversion.
Every financial move should align with a planned purpose. At StrongBox Wealth, we’re here to guide you in designing your own unique tax efficient year-end strategy. Unlock your tomorrow with StrongBox Wealth today.
