Cooler weather, shorter days, football, and pumpkin patches all bring home that we are well into fall and approaching the end of the year. For many people, the end of the year can be a good time to reflect and take stock of where you are and where you would like to go. As someone who provides financial advice professionally, I encourage my clients, friends, and family to apply this to their financial lives as well.
Approaching year-end is always a good time to check in on your financial plan. Doing a check-in on the goals that you set out to achieve at the beginning of the year is an excellent place to start. Additionally, several tax smart strategies have a year-end cutoff time if you would like to take advantage of them.
For those charitably inclined, several moves can be taken to reduce the impact of taxes. This may include utilizing a charitable vehicle that lets you take deductions today for donations tomorrow. It could also include using a bunching strategy to help get over the standard deduction on your tax return and be able to utilize itemized deductions. Additionally, giving your required minimum distribution from your IRA to a charity can be an efficient way to minimize taxes and meet your charitable goals.
This past year has been one of the most difficult years on record for bonds due to the rising interest rates. For many who are holding bond funds, the losses have added up. With this in mind, taking a look at your positions to see if there is any tax-loss harvesting that can be done can be an integral part of your financial plan. This will allow you to capture the benefit of the losses today to offset gains in the future. This is another opportunity to be sure to capture before year-end.
Year-end is also a time to consider whether a Roth conversion may be a strategy that will help you in the future. While there are a lot of nuances to this strategy, many times, it does make sense to convert an amount if you think you will be in a higher tax bracket in the future. One of the most important considerations when looking at your tax bracket is to understand the impact of required minimum distributions. For this to apply to the current year, it needs to be completed prior to year-end.
Should you have any questions on any of these strategies, working with a local CERTIFIED FINANCIAL PLANNER™ professional is a great place to start. Their education, experience, and ethics ensure that they are qualified to help with these strategies. Take the first step in building a financial plan today by reaching out, or learning more about how we do things differently.
