Yearly tax-optimization checklist!

Hi!

If you are an individual filer & have a complex situation, we recommend booking a call with your advisor prior to year-end to discuss advanced planning. There are many things you can do to optimize your tax & help you gain an understanding.

That said, here are a few basic, actionable steps to ensure you have the best tax outcome.

For wage earners:

• If you are married, I cannot stress enough how important it is to at least once run a numerical comparison between filing jointly vs filing separately. We have routinely been finding 5-figure differences in tax owed. Nowis the time for such planning – we will kindly ask that we have a definitive plan in place by tax season!
• The 401k deduction is one of the largest reductions of taxable income available. In 2023, the maximum is $22,500. Please remember that it often takes more than one payroll cycle to change this with your employer, so if you need to make a catch-up contribution for the year, contact your HR right away!
• Similar for HSA or other spending programs – it is $3,850 for individuals and $7,750 for families for the HSA deduction
• If you have equity from your current or former employer, please make sure to make any final strategy choices immediately, such as exercise of ISO/NSO or ESPP/RSU strategy. If you have prior year AMT credits, it may make sense to analyze possibly using them
• If you have moved states, contact your employer immediately to ensure you are not withholding for the wrong state. Each year we see taxpayers overpaying tens of thousands (and more, in some cases) to the wrong state without always having easy options for recourse retroactively
• If you have a liquidity event or have significant capital gains, we can look into QSBS, Qualified Opportunity Zones or Qualified Opportunity Funds to reduce or eliminate capital gains
• Certain states allow for 529 College Savings Plans that can create a short-term tax deduction on your state returns
• Maximize your charitable contributions by opening a Donor Advisory Fund, Private Foundation or Charitable Remainder Trust.
• If you have prior year returns that must be filed, please work on this immediately as IRS’s systems only allow e-file back to a certain point & other paper-mailed options will require additional footwork. Remember, your refunds expire and are taken by the IRS after 3 years.
• If you took a Covid-Related Distribution from your retirement plan and can afford to pay it back, you can get a refund on the tax you paid for the distribution.
• There are many more, which we can cover during a consulting session if you would like to book one

For business owners, we have a special checklist of 10 or so items – reply to me directly and I will send it to you. This email is getting long!

If you need help with any of the above, just contact us & we will schedule a call to go into more detail. We are taking only a limited number of calls each season, so we do kindly ask that any such appointments be scheduled this as soon as possible while we still have time to implement strategy.