It’s Tax Planning Season: 6 Things to Consider Now

By October 27, 2016Financial Planning

It’s tax planning season at Schulz Wealth. From now until Thanksgiving, we’ll have our eyeshades on, reviewing accounts and client files to make sure we close out the year in a tax efficient manner.Tax calculator pen and glasses

Most people do their tax planning in March and April, but by then it’s too late to do anything about your current tax bill. We move it up a few months so if there is surprise, maybe we can catch it and make some adjustments before it’s too late.

Here are some steps to consider:

1. Estimate Your Tax Bill: Armed with your pay check stubs, real estate tax bills, large purchase invoices, realized capital gains, and other items, your accountant can estimate your tax bill. If there are some surprises, you still have time to implement some strategies.

2. Max Out Retirement Plan Contributions: There are only a few paydays left in the year. Many employers will allow you to make adjustments to your deferrals to max out and/or make catch-up contributions. Don’t delay!

3. Finalize Required Minimum Distributions: If you are subject to RMD’s and have not distributed them from your retirement accounts, make sure you get it done before the end of the year or you will face stiff penalties.

4. Tax Loss Harvesting: Your adviser can offset some of the gains in your investment accounts by purposely switching out underwater positions. Certain rules apply, but it’s a fantastic way to offset taxable gains.

5. Double up Property Tax Payments: If your income flirts with AMT or standard deduction limits, consider paying two years of property taxes in the same year. This will sometimes diminish AMT or allow higher deductions every other year.

6. Make Donor-Advised Charitable Contributions: Wouldn’t it be nice if you could set aside money or highly-appreciated equities this year, take the deduction, then decide later the charities to receive them? You can! A donor-advised account allows you to do this very thing, thus providing more flexibility with your charitable giving.

These steps, along with others, are great ways to minimize taxes and circumvent any surprises. I encourage you to block out some time and see what you can do before December 31 arrives. If you have further questions, please do not hesitate to ask.