As we approach the end of the year, now is the time to make the most of your tax planning. With proactive steps, you can reduce your liability and set yourself up for a strong financial start in 2025.
Here’s your action plan to finish the year strong over the next couple of weeks:
Core Tax Planning Steps:
- Estimate Your Tax Liability – Avoid surprises by calculating your estimated taxes now.
- Plan Payments Strategically – Prepay expenses or defer income depending on what gives you the best advantage.
- Review Deductions and Limits – Maximize itemized deductions while navigating limitations like the Alternative Minimum Tax (AMT).
- Audit Payroll Taxes – For business owners ensure payroll taxes are accurate and on time to sidestep costly penalties.
- Collaborate With Your Team – Work with your tax advisor, business partners, and stakeholders to finalize your strategy and needed action steps over the next couple of weeks.
Additional Tax-Saving Opportunities:
- Max Out Retirement Contributions – Boost contributions to IRAs, 401(k)s, or SEP IRAs to lower taxable income.
- Harvest Tax Losses – Offset gains by selling underperforming investments.
- Accelerate Deductions – Pay deductible expenses (like property taxes or mortgage interest) before December 31.
- Defer Income – Push income into January to minimize taxes for the current year (if it aligns with your financial goals).
- Make Charitable Donations – Gift appreciated securities or cash to qualified charities.
- Contribute to Health Savings Accounts (HSAs) – Take advantage of tax-deductible contributions to HSAs.
- Spend Flexible Spending Account (FSA) Funds – Use remaining FSA balances to avoid forfeiting them.
- Purchase Business Equipment – Consider buying assets that qualify for Section 179 or bonus depreciation.
- Utilize the Annual Gift Tax Exclusion – Gift up to $18,000 per recipient to transfer wealth tax-free in 2024.
By implementing these strategies as they fit with your personal situation and goals, you can reduce your tax liability, avoid costly surprises, and take control of your financial future.
Don’t let the end-of-year rush derail your financial goals. A few hours of planning and action now could save you thousands—or even millions—in taxes and set you up for greater success.
Always consult with your financial advisor to tailor these strategies to your personal financial situation.
Want to learn more about how you can make way more money and pay way less in tax? Book a call with the team at TFW Advisors® today!