Conducting a year-end tax review of your financial situation can uncover opportunities to cut your tax bill or save you from an unpleasant tax surprise. But hurry, the clock is ticking! Here are a few areas to consider when reviewing your year-end tax savings checklist to trim your tax bill in the next few weeks.

Year-end tax savings checklist

1. Appreciated Assets. Consider selling appreciated assets in the tax year that helps you the most. While this strategy may be challenging to accomplish late in the year, it’s still worth consideration. To do this, estimate your current year’s taxable income and compare it to next year’s projected taxable income. Then, the appreciated asset will be sold in the year, yielding the lowest tax. Remember, if appropriate, to account for the 3.8% net investment income tax in your estimates.
2. Health Spending Accounts. If you participate in a Health Savings Account (HSA), maximize your annual contribution to reduce your taxable income. Remember, these funds allow you to pay for qualified health expenses with pre-tax dollars. The deadline for contributing to your HSA and getting a deduction for the 2024 tax year is April 15, 2025. The maximum contribution for 2024 is $4,150 for single and $8,300 for married couples. If you’re age 55 or older, you can add $1,000 to your HSA contribution. If you have a flexible savings account, you can carry forward a maximum balance of $640 from 2024 into 2025 if your plan allows this.
3. Tax-Efficient Contributions. As you review your appreciated assets, consider donating one or more of these assets if it helps you pass the itemized deduction threshold. If it does, consider donating next year’s contributions to maximize the tax savings. Remember, when you donate a long-term asset (held for more than one year), you avoid paying capital gains taxes while getting a market-value charitable deduction. And don’t forget, if you are over 70 1/2, you can make up to $100,000 in direct contributions from a qualified IRA account and not pay tax on the withdrawal.

Don’t forget about those retirement accounts

• Retirement Savings Accounts. The deadline to contribute to a 401(k) plan to help reduce your 2024 taxable income is December 31st. So, if your employer’s plan allows it, consider making a last-minute lump sum contribution. For 2024, you can contribute up to $23,000 to a 401(k), plus another $7,500 if you’re 50 or older. Even better, you have until April 15, 2025, to contribute up to $7,000 into a traditional IRA. In addition, you will receive another $1,000 if you’re 50 or older. As long as your income does not exceed phaseout limits, your traditional IRA contribution can reduce your taxable income on your 2024 tax return.
• Investments. If you own stock outside a tax-deferred retirement plan, you can sell your underperforming stocks by December 31st and use these losses to reduce any taxable capital gains. If your net capital losses exceed your gains, you can net up to $3,000 against other income, such as wages. Losses over $3,000 can be used in future years.

Contact our RRBB advisors if you have any questions or are ready to take the next step.