Year-End Moves to Consider Now
By: Cameron Diehl, CFP®
Friends – As we approach year-end I wanted to share a few quick tips to help you save on taxes come April. And with the potential for tax reform, some of these are especially timely:
- Contributions to 401(k)s, IRAs and other retirement accounts – Maximizing pre-tax contributions to these accounts can reduce your taxable income and give your retirement savings a boost (up to $18,000 for 401(k)s and $5,500 for IRAs in 2017 with catch up options for anyone over 50).
- Health Savings Accounts (HSAs) – This lesser-known savings option is growing rapidly in popularity and is one of the best options available for anyone eligible because they have a high-deductible health plan. Contributions (up to $3,400 for individuals and $6,750 for families plus catch ups for anyone over 55) are triple tax advantaged – they are made pre-tax, can be invested and grow tax-deferred and withdrawn tax free if used for medical expenses. Unused balances can be rolled forward year-to-year, providing helpful savings on medical expenses now or an additional retirement savings option for the future.
- Tax-loss harvesting – Consider harvesting any losses in your portfolio to offset gains and take up to a $3,000 deduction. Additionally, review your portfolio’s overall tax efficiency, including total turnover, capital gain distributions from mutual funds, etc.
- Income and deductions – To the extent you can, consider delaying income into next year and accelerating deductions into this year, especially given the prospect for lower taxes going forward.
- Charitable giving – Complete any planned charitable gifts before year end. Consider giving appreciated securities instead of cash to avoid capital gains taxes, make a larger donation and potentially receive a larger deduction. You may want to accelerate future donations given the possibility of tax reform limiting this option.
- Required minimum distributions (RMDs) – If applicable, don’t forget to take required distributions from retirement accounts to avoid up to a 50% penalty on undistributed amounts.
If you have questions about any of these, please don’t hesitate to call or email me. I’m always happy to help.
Disclosure: While we are familiar with the tax provisions of the issues presented herein, as Financial Advisors of Raymond James & Associates we are not qualified to render advice on tax or legal matters. You should discuss any tax or legal matters with the appropriate professional. Information contained herein was received from sources believed to be reliable, but accuracy is not guaranteed. Information provided is general in nature, and is not a complete statement of all information necessary for making an investment decision.
