Year End Tax Planning

As we head into the last month and a half of the calendar year, individuals and small business owners should make planning considerations to optimize their tax positions.

Please contact our offices to review year-end planning on an individualized basis. I have highlighted several items that are important to review before we close the year.

Reasons that you might need a year-end tax planning meeting:

• Verify that your wage withholdings are in line with expectations.
• Review your business profit and update final quarterly estimated payments.
• Determine capital gain impact of significant asset sales such as business, stocks, principal residence or rental property.
• Standard deduction vs. itemized deduction planning.
• Maximize retirement contributions for employer-sponsored plan and self-employed plans.
• Changes in employer, geography or marital status.
• Discuss any phaseouts and thresholds that may impact the return.
• Year-end gifting.

Additional tax considerations for filing season 2023 for individual and business income tax filers:

• If itemizing deductions, consider accelerating payment of property tax, mortgage interest, medical expenses and charitable donations before year-end to maximize deduction.
• Realize investment losses to offset gains up to an allowable net loss of $3,000 from other income.
• Maximize your 401k contribution ($22,500 max, plus $7,500 for age 50 and up) or traditional or Roth IRA ($6,500 max, plus $1,000 for age 50 and up), subject to income thresholds.
• Verify you have taken any required minimum distribution from traditional IRAs for individuals aged 73 and older.
• Maximize the gift tax exclusion by gifting up to $17,000 to each individual ($34,000 for married couples).
• Explore electric vehicle and energy efficient tax credits made possible by the Inflation Reduction Act.
• Make plans to use your flexible spending account funds by year-end.
• Explore options for accelerated vehicle depreciation, subject to business use, net income and deduction limitations.

Should I meet with my tax and investment advisor before year-end?

A few reasons why you should:

• There is a significant change in income from the prior year which may lead to a change in tax bracket.
• You are self-employed and need consultation on what amount to make as a retirement contribution.
• Develop an expectation for capital gains or losses, dividends and interest coming from your taxable investment accounts.
• Eliminate any confusion regarding retirement distributions, conversions or rollovers that occurred during the year.

At Kroon & Mitchell we believe in an integrated approach to tax and investment. Any investment strategy has tax implications. We customize our approach based on your needs and financial goals. Contact us to schedule your year end planning meeting before December 31.