End-of-Year Tax Tips for Wealthy Families

Shane Tenny, CFP^®, goes over four tax moves to make before the end of the year. By implementing these year-end tax tips, high-income households can potentially save money in taxes while strengthening their overall financial position. Remember, the key to successful tax planning is to act before December 31st. 

Transcript:

[00:00:01.840 --> 00:00:25.510] Hi, everyone, Shane Tenny, managing partner at Spaugh Dameron Tenny, coming to you with 4 tax tips for wealthy families as we end the year. You want to pay attention because tax tips don't do a lot of good in the spring, when you're filing your taxes. Now is the time to pay attention and take action. So what are they?  First up, take advantage of your tax-deferred retirement plans through work.

[00:00:25.510 --> 00:00:43.650] The limits that you can contribute to your 401(k), your 403(b), or a SEP IRA go up each and every year. If you didn't make an adjustment earlier this year to max out, you may not reach the limit, and you will have given up the opportunity to defer more taxable income.

[00:00:43.650 --> 00:01:02.230] So, check your latest pay. stub, and do the math. Make sure you're on track to max out your 401(k) at $23,000 for this year. Or if you're eligible to contribute to a SEP IRA because of side income, moonlighting work, or something like that. The limit this year is $69,000.

[00:01:02.570 --> 00:01:39.240] Number 2 - Don't forget to look at your investment portfolio for any potential losses. Now I realize the stock market has been on a nice run the last couple of years. But if you have a mutual fund or a stock that is worth less than you originally invested, that temporary loss, if you sell it, can be used to offset the tax liability of any gains in investments, and if the loss is large enough, you can even use up to $3,000 of it to offset taxation on ordinary income for this year.

[00:01:39.510 --> 00:01:42.029] Number 3 - Charitable donations.

[00:01:42.320 --> 00:02:07.670] There are a couple of ways this can help out. Number one, if you have appreciated investments, stocks, or mutual funds that have gone up in value, instead of paying tax on that profit by selling the investment, you can give that away to a charity and avoid capital gains tax on the unrealized gain and get a deduction for the gift.

[00:02:07.820 --> 00:02:32.790] Just reach out to the charity or the organization that's important to you and ask them how they can receive appreciated investments. The second way this can help is by giving away cash, making donations to organizations, or rescue relief, or those sorts of things are deductible to reduce your taxable income. If you're writing a check, you want to make sure it's postmarked by December 31 to get credit for this year.

[00:02:32.800 --> 00:02:58.330] And the final way that many of us can make charitable donations is by cleaning out our garages and our closets, that furniture, those household goods, the exercise equipment, or the clothing that you no longer use, is worth something to someone else. When you make donations to organizations like Goodwill or the National Kidney Foundation. You'll receive a tax receipt that will allow you to deduct the value of your donation on your tax return if you itemize.

[00:02:58.590 --> 00:03:03.649] Number 4 - Defer income or accelerate expenses.

[00:03:03.830 --> 00:03:33.349] If you have the ability to control the timing or the receipt of, say, a year-end bonus if you receive that money in January, it generally isn't going to be taxed in 2024. Likewise, if you own a business and have expenses that you would ordinarily plan to pay in January or February, say buying new furniture or equipment, maybe paying property taxes if you pay those things in December, you'll be able to use the deduction against your taxable income for this year.

[00:03:33.370 --> 00:03:40.200] There are our 4 tax tips. Hope it's helpful, as always, if you have any questions, don't hesitate to reach out. We're here to help.