Why Year-End Tax Planning Is a Smart Move for Your Financial Future
by Jennifer Parker – Financial Advisor
As the calendar winds down, many people shift their focus to holiday plans and New Year’s resolutions. But for savvy investors and proactive planners, the end of the year presents a golden opportunity: year-end tax planning.
Let’s look at why this is one of the most valuable steps you can take to protect and grow your wealth.
What Is Year-End Tax Planning?
Year-end tax planning involves reviewing your financial situation before December 31 to identify strategies that can reduce your tax liability and align your finances with your long-term goals. It’s not just about saving on taxes—it’s about making smart decisions that support your overall financial health.
Key Benefits of Year-End Tax Planning
1. Reduce Your Tax Bill
By taking advantage of deductions, credits, and timing strategies, you can significantly lower your taxable income. For example:
- Tax-loss harvesting allows you to sell underperforming investments to offset gains elsewhere.
- Charitable contributions made before year-end can qualify for deductions, especially when using donor-advised funds.
- Accelerating deductions (like medical expenses or mortgage interest) and deferring income (such as bonuses) can help you stay in a lower tax bracket
2. Maximize Retirement Contributions
Contributing to retirement accounts like 401(k)s, IRAs, and HSAs before the deadline can reduce your taxable income and boost your retirement savings. For 2024, individuals can contribute up to $23,000 to a 401(k), with an additional $7,500 catch-up contribution for those over 50.
3. Avoid Costly Mistakes
Missing deadlines for things like Required Minimum Distributions (RMDs) or late contributions can result in penalties or lost opportunities. Year-end planning ensures you stay compliant and avoid surprises.
4. Align Tax Strategy with Life Goals
Whether you’re planning a major purchase, funding education, or preparing for retirement, tax planning helps you make informed decisions that support your broader financial objectives.
5. Stay Ahead of Tax Law Changes
With potential shifts in tax policy on the horizon, especially as provisions from the Tax Cuts and Jobs Act sunset in 2025, acting now can lock in current benefits and prepare you for future changes.
Let’s Plan Together
Year-end tax planning isn’t just a checklist—it’s a strategic conversation. By reviewing your portfolio, income, and goals now with your financial advisor, you can uncover opportunities that might otherwise be missed. It’s also a great time to set expectations for the coming year and ensure your financial plan is on track.
Ready to make the most of the year-end? Schedule a review and explore the strategies that can benefit you most.
Raymond James and its advisors do not offer tax or legal advice. You should discuss any tax or legal matters with the appropriate professional.
FINANCIAL ADVISOR
Pentas Wealth Management
Raymond James
PHONE: 828.617.9050
EMAIL: Jen.Parker@RaymondJames.com