2024 may be coming to an end but that doesn’t mean you should put your financial strategy on hold. Now is the perfect time to review your finances, reflect on your goals, and take strategic steps now to help optimize your taxes for the new year.

By addressing tax implications now, you’re giving yourself the freedom to focus on what really matters to you in 2025, having made proactive, wise choices to help you get there.

At Intelliplan Financial, we’re big advocates of proactive financial planning especially when it comes to taxes, because we’ve seen how managing your taxes now can make all the difference. So as 2024 wraps up, we’d like to share some year-end strategies that can ease your tax burdens now and help protect your wealth next year and for many more to come.

1. Eliminate Capital Gains with Tax-Loss Harvesting

If you’ve experienced losses in your investment portfolio this year, tax-loss harvesting may be a way to turn those losses into an opportunity to save on future taxes.

By selling certain investments, you can offset other gains and reduce your taxable income, while finding similar assets to re-invest in can help you still maintain your overall investment plan. Just not too similar – it’s key to keep the wash-sale rule in mind: you can’t buy a “substantially identical” investment within 30 days of selling it if you want to claim the loss.

This strategy can be especially beneficial during volatile markets like we’ve seen this year, allowing you to balance your portfolio while potentially saving on taxes.

2. Consider Converting Your Traditional IRA to a Roth

A Roth conversion could be a powerful strategy to secure tax-free income in retirement. While you’ll pay taxes on the converted amount now, future withdrawals will be tax-free, potentially saving you significantly in the long run.

By the time you combine your retirement plans, investments, and other benefits, you might find yourself in a higher tax bracket than you expected. If you’d like to see how these strategies could impact your retirement, generate a personalized report with our free retirement tax bill analysis.

If you’d like to see how these strategies could impact your retirement, generate a personalized report with our free retirement tax bill analysis. This report will provide a snapshot of your potential tax bill in retirement and help us identify areas to minimize your future taxes.

See My Retirement Tax Bill Now

3. Charitable Giving: Aligning Your Money with Your Heart

Making charitable contributions is not only a wonderful way to support causes that are close to your heart, but it can also provide meaningful tax benefits. If you’re planning on making any charitable donations, consider these strategies:

• Bunch donations: If you’re interested in maximizing your deductions, consider “bunching” your donations—making a larger contribution this year to potentially qualify for itemized deductions.
• Donate appreciated assets: Giving stocks or other appreciated assets directly to charities can help you avoid capital gains taxes while still claiming a deduction for the full market value.
• Set up a Donor-Advised Fund (DAF): This allows you to make a large charitable contribution, receive an immediate tax deduction, and then recommend grants from the fund over time.

Our advisors can help you find ways to balance your heartfelt gifts with your financial needs, so you can give in a way that’s fulfilling and sustainable.

4. Required Minimum Distributions (RMDs): Making the Most of Your Lifetime Savings

If you’re 72 or older, RMDs are a reality. But they don’t have to be a burden if you give them careful attention. Missing your RMD can result in a steep 25% penalty on the amount not taken, making it crucial to stay on top of these distributions.

If you find that your RMD income pushes you into a higher tax bracket, there are strategies to help reduce your distribution amount. One popular option is using your RMD for a Qualified Charitable Distribution (QCD), which can satisfy your RMD requirement while supporting causes close to your heart—all without increasing your taxable income.

Planning ahead is key to ensuring your RMDs enhance rather than complicate your retirement lifestyle.

5. Set Yourself Up for Success with Retirement Contributions

Contributing to your retirement accounts is a great way to reduce your taxable income while saving for the future. Based on your individual situation, it might make sense to contribute to your 401(k) or IRA—the right choice depends on your specific financial circumstances and goals.

If you’re 50 or older, take advantage of your catch-up contributions. You can also consider a Roth conversion to potentially give yourself tax-free income in retirement. Every dollar you save now is a step towards the retirement lifestyle you desire.

6. Strategic Gifting to Loved Ones

While gifting won’t reduce your current tax burden, it’s an excellent strategy for estate planning. In 2024, you can gift up to $18,000 per person ($36,000 for married couples) without triggering gift tax requirements. This approach can help reduce your taxable estate while providing immediate support to your loved ones.

7. Plan Smart, Live Better by Optimizing Income and Deductions

Your income and deductions tell the story of your year. Let’s make sure it’s a story with a happy ending by timing both in a way that aligns with your life goals.

Consider deferring income to next year, if possible, especially if you expect to be in a lower tax bracket and accelerating deductions into the current year if it will benefit you.

It’s wise to have an advisor help you look for often-overlooked deductions like state sales tax, medical expenses, or job-hunting costs – they’re like finding hidden treasures in your financial life.

Remember, it’s not just about paying the least taxes, but about using the tax code to support the life you want to live.

Could Your Tax Bill in Retirement Be Bigger Than You Think?

You don’t have to wait until retirement to find out or optimize your tax situation and in our opinion, you shouldn’t.

Use our free, no-obligation tool to calculate your potential tax bill in just 30 seconds. Hopefully your bill is reasonable, but if you’re not happy or not sure — let’s talk!

See My Retirement Tax Bill Now

Our advisors at Intelliplan Financial specialize in tax management as part of our holistic planning process. We’re passionate about helping you better understand what your tax situation may look like in the future and how the decisions you make today can affect your future wealth.

We can provide strategies and recommendations to help make your calculated tax savings reality — book a call to find out how.

Disclosure: Financial Planning and Advisory Services are offered through Prosperity Capital Advisors (“PCA”), an SEC-registered investment adviser.  Registration as an investment adviser does not imply a certain level of skill or training. Intelliplan Financial and PCA are separate, non-affiliated entities. PCA does not provide tax or legal advice. Insurance services offered through Intelliplan Financial are not affiliated with PCA.