Insight

What Issues Should I Consider Before the End of The Year?

While 2022 is quickly approaching there is still time to sit down and ensure that you are making the most of your 2021 planning opportunities. Below are a few of the important things to consider but we also included a full checklist of things to consider before year end.

If you have year-end planning questions, we are always available to meet and discuss.

Investment Accounts

• Do you have unrealized investment losses in your taxable accounts?
  • If so, you may want to consider realizing some of the losses that can help offset any gains you may have. You can also write off $3,000 in losses against ordinary income as well as carry forward any unused losses.
  • Please let us know any special tax circumstances you may have with your realized or unrealized capital gains elsewhere or if you have loss carry forwards.

• Are you age 72 or older, or are you taking an RMD from an inherited IRA?
  • You have until December 31^st to take your required minimum distribution

Tax Planning

• Reduce your Income and Tax Liability
  • This can be done by increasing contributions to qualified accounts i.e. 401(k)s, IRA’s, Etc.
    • Deadlines for 401(k) contributions are December 31^st while IRA’s can be funded by Tax Day the following year

• Are you charitably inclined and want to reduce taxes?
  • For taxpayers who claim the standard deduction, you are allowed a deduction of $300 ($600 if MFJ) for cash contributions to certain qualifying charities in 2021.
  • For taxpayers who claim the standard deduction, you are allowed a deduction of $300 ($600 if MFJ) for cash contributions to certain qualifying charities in 2021.
  • Explore tax-efficient funding strategies, such as gifting appreciated securities or making a QCD.
  • If you expect to take the standard deduction ($12,550 if single, $25,100 if MFJ), consider bunching your charitable contributions (or contributing to a donor-advised fund) every few years which may allow itemization in specific years.
    • Deadline for Charitable contributions is December 31^st

Estate Planning

• Have there been any changes to your family, heirs, or have you bought/sold any assets this year?
  • If so, consider reviewing your estate plan and updating any beneficiary information

• Are there any gifts you still want to make this year?
  • If so, gifts up to the annual exclusion amount of $15,000 (per year, per donee) are gift tax-free.

Other Planning Ideas

• Are you able to Save More?
  • If so, consider what types of accounts might make the most sense to save excess cash
• Do you want to contribute to a 529 plan?
  • You can use your annual exclusion amount to contribute up to$15,000 per year to a beneficiary’s 529 account, gift tax-free.
  • Alternatively, you can make a lump sum contribution of up to$75,000 to a beneficiary’s 529 account, and elect to treat it as if it were made evenly over a 5-year period, gift tax-free

If you want to schedule an end of the year planning meeting give us a call at 610-825-3540. Here is the full checklist for end of year planning: