As the 2024 year wraps up, have you thought about your tax strategy? Whether you’re juggling rental income, considering stock options, or just trying to manage your family budget, smart year-end tax planning can help you keep more money in your pocket.
Here’s the good news: with the right steps now, you can reduce your tax bill, grow your wealth, and start 2024 on solid financial ground. Let’s break it down so anyone can take action—no accounting degree required.
Why Year-End Tax Planning Matters
Did you know some of the best ways to save on taxes disappear after December 31? Acting now can help you:
- Lower your taxable income.
- Maximize deductions and credits.
- Avoid last-minute surprises come tax season.
Ask yourself: Are you leaving money on the table by waiting? Let’s change that.
Your Year-End Tax Planning Checklist
Here’s a simple, step-by-step checklist to help you take control of your taxes:
1. Max Out Retirement Contributions
Why it matters: Retirement accounts like 401(k)s and IRAs let you save for the future while cutting this year’s tax bill. ROTH IRAs don't save you taxes today, but grow tax-free, which means long-term savings.
Action: Contribute up to $23,000 for 2024—or $30,500 if you’re 50+. For ROTH IRAs, check if your income qualifies.
Pro Tip: ROTH contributions won’t lower this year’s taxes, but the tax-free growth means your future self will thank you.
2. Consider ROTH Conversions
Why it matters: If your income is lower this year, converting a traditional IRA to a ROTH IRA could lock in today’s tax rates.
Action: Talk to your CPA to see if converting “chunks” of your IRA makes sense. Just remember, ROTH conversions create taxable income today, but withdrawals after age 59½ are tax-free.
Pro Tip: We recommend converting in "chunks" or manageable amounts and not all at once, while using tax-saving strategies to offset the income created by the conversion.
3. Harvest Investment Losses
Why it matters: Got some losing investments? Selling them can offset gains from other assets, reducing your taxable income.
Action: Work with your advisor to review your portfolio and sell underperforming stocks before December 31.
Pro Tip: This strategy can be especially helpful if you’re expecting large capital gains this year.
4. Take Required Minimum Distributions (RMDs)
Why it matters: If you’re 73 or older—or inherited a retirement account—you’re required to withdraw a certain amount to avoid penalties.
Action: Confirm the amount with your advisor and withdraw it before year-end.
Pro Tip: If you don’t need the money, consider a Qualified Charitable Distribution (QCD). This can count toward your RMD requirement and reduce your taxable income.
5. Make Charitable Contributions
Why it matters: Donations can lower your tax bill if you itemize. Options like donating appreciated stock or using a Donor Advised Fund can provide even bigger benefits.
Action: Make contributions by December 31 and keep your receipts.
Pro Tip: If you’re expecting a $1 million+ gain, ask your CPA about a Charitable Remainder Unitrust (CRUT) to spread out the tax impact and support a cause you care about.
6. Maximize Health Savings Account (HSA) Contributions
Why it matters: HSAs are triple tax-advantaged—your contributions, growth, and withdrawals for medical expenses are all tax-free. Read more about HSA benefits here.
Action: You must meet specific requirements to contribute to an HSA. Contribute up to the annual limit each year and grow your funds tax free.
Pro Tip: Even if you don’t use the funds now, HSAs can serve as a secondary retirement account for medical costs in the future.
7. Prepay Deductible Expenses
Why it matters: Certain expenses, like property taxes or mortgage interest, can boost your deductions if paid before year-end.
Action: Ask your CPA which expenses make sense to prepay now.
Pro Tip: Timing matters. Prepayments only make sense if you itemize deductions.
8. Spend Flexible Spending Account (FSA) Funds
Why it matters: FSAs are “use-it-or-lose-it,” so any leftover funds disappear at the end of the year.
Action: Check your balance and spend it on eligible medical or childcare expenses before December 31.
Pro Tip: Many FSAs allow small carryovers into the next year, so check your plan for specific rules.
9. Make an Estimated Tax Payment
Why it matters: If you have income without tax withholdings (like rental or business income), making a payment now avoids penalties later.
Action: Work with your tax pro to calculate and pay estimated taxes before January 15.
Pro Tip: Paying quarterly estimated taxes can help you avoid interest and penalties altogether.
10. Organize Your Records
Why it matters: Good records mean easier filing and fewer missed deductions.
Action: Update your books for rental properties, side hustles, and personal finances. Scan receipts for home improvements—they may save you money if you sell your house later.
Pro Tip: Home improvement receipts can reduce your taxable gain if you sell your property in the future. Scan, file and save them every year.
11. Take Advantage of Solar and EV Tax Credits
Why it matters: Solar installations can get you a 30% tax credit, and qualifying electric vehicles can provide up to $7,500 in credits.
Action: Install solar panels or buy a qualifying EV before year-end. Keep all receipts and ensure the vehicle meets IRS requirements.
Pro Tip: Solar tax credits have no income limits, but EV credits do. Check both the vehicle qualifications and your income to ensure eligibility.
BONUS: Start a side hustle or a business and unlock pandora's box of tax savings. Read more about business tax savings tips here.
Take Action Now
Don’t wait until tax season to start planning. Ask yourself:
- Have I taken full advantage of deductions and credits?
- Are there ways to lower my taxable income?
- What can I do today to save for tomorrow?
Need guidance? Book a year-end tax consultation now to create a strategy that works for you.
Start saving today—your future self will thank you!
