As the year comes to a close, it’s important to start thinking about your tax strategy for the upcoming tax season.
Our attorneys, Abboud Chaballout and Yaser Ali presented a webinar on year-end tax planning strategies last night, covering loss harvesting, roth conversions, bunching deductions and donations, and charitable lead annuity trusts. You can watch the recording here:
In addition, you can consider the following basic strategies as well:
- Max out your retirement contributions. Contributions to a traditional IRA or 401(k) can reduce your taxable income, which in turn can lower the amount of taxes you owe. If you haven’t already, consider contributing the maximum amount allowed by the IRS before the end of the year.
- Take advantage of deductions and credits. There are several deductions and credits available that can reduce your tax bill. These include deductions for charitable donations, student loan interest, and medical expenses. It’s important to carefully review all available deductions and credits to ensure that you are taking advantage of as many as possible.
- Defer income to next year. If you are expecting a bonus or other significant source of income in the coming year, you may be able to defer it until next year. This can help to spread out your income and potentially lower your tax bill.
- Review your tax withholding. As the year comes to a close, it’s important to review your tax withholding to ensure that you are having the right amount of taxes withheld from your paychecks. If you are having too much withheld, you may be entitled to a larger refund. On the other hand, if you are having too little withheld, you may owe taxes when you file your return.
- Fund an HSA if you have an eligible plan. Health Savings Accounts (HSAs) can also be a useful tool for reducing your tax burden. HSAs are tax-advantaged savings accounts that are used to pay for medical expenses. Contributions to an HSA are tax-deductible, and the funds in the account can be used tax-free to pay for qualified medical expenses.
Implementing these strategies before the end of the year can help you save money on your taxes and put more money back in your pocket. As always, let us know if you have any questions or if we can be of assistance!