Year-end tax planning tips to help maximize your tax return
Take advantage of end of year tax strategies that may help put money back in your pocket.
Consider year-end financial moves that may help reduce your income tax liability when you file next spring. Start with these tax planning tips:
Donate to qualified charities and organizations
You can generally deduct contributions of up to 50% of your adjusted gross income to qualified charities and organizations if they're made before December 31. Consider the following:
- Donate stock – You can generally deduct the fair market value of donated stock.
- Use a community foundation – You direct the money, and the foundation pays it out over a period of years. You can generally deduct the donation the year you paid the foundation.
Contribute to your 401k
Add pre-tax money to your 401k before the end of the year to reduce your taxable income.
Sell losing stock
Sell losing stock before year's end to deduct the capital losses against any capital gains you realized, and reduce your taxes on the money you earned from successful stock. Once you offset your capital gains, you, as an individual, can generally use any excess losses to reduce ordinary income up to an annual limit of $3,000.
Focus on long-term capital gains
Assets that you hold longer than a year before selling is a long-term capital gain. While short-term capital gains are taxed like your regular income, long-term capital gains are taxed based on graduated thresholds for taxable income. Tax payers that report long-term capital gains see tax rates of 15% or lower. Use the time now to evaluate your financial portfolio and shift more funds to investments that offer longer-term tax savings. Visit the IRS for additional information on capital gains and losses.
Fund education
Provide a family member with the gift of education. Consider a contribution to a 529 plan as many states allow residents a deduction for contributions.
Spend your FSA
You may have money left in your Flex Spending Account (FSA). Consider using these funds by getting caught up on your doctor's visits, getting a cleaning at the dentist or a new pair of eyeglasses. Per the FSA carryover rule, up to $610 can be carried over at the end of the year to your 2023 FSA account. If you don’t use it, you can lose it. Keep in mind, you’ll pay taxes on any funds still in the account on December 31st.
Gather receipts related to property taxes or large purchases
If you pay property taxes on your home, state taxes or paid sales tax for a large purchase, you can deduct up to $10,000 ($5,000 if married and filing separately).
Start your end of year tax planning today. Consult a tax professional if you have any questions and to help make the most of your tax filing.
