top of page


  • Writer's pictureIAP, LLC

Save Taxes by Making these Moves Before Year-End

By the end of the year it's easy to be consumed with Black Friday (or week!) shopping, holiday parties and time with family. But don't push your personal finance to-do list to January with the rest of your New Year's Resolutions. There are a few things that need to be done before December 31st to take advantage of tax savings. That way, the only thing you need to worry about in January is finally getting into shape!

Below are some Income Tax Planning strategies you should think about before the end of the year:


Does your employer offer a 401(k), 403(b) or other type of retirement account that you contribute to?

If so, check to see if you are taking advantage of the maximum deferral for these types of accounts. For 2019, the annual limit is $19,000 (higher for those over 50 years of age). If you aren't currently setup to contribute the maximum by year-end, see what you can do to increase your contributions for the last couple of pay periods of the year. The amounts you save in these accounts are tax-deferred and will save you taxes in 2019.


While the stock market has been on the rise you should still check your portfolio for any positions that may have losses. If you sell those positions before the end of the year, you can claim a capital loss on your tax return, or offset gains you already recognized. The IRS limits net capital losses to $3,000 per year, but any excess amounts will be carried forward to future tax years.


There are many ways to be tax efficient when making charitable gifts. Donating appreciated stock allows you to avoid paying capital gains while reducing your stock allocation and receiving a charitable deduction. If the numbers are large enough, you might even consider a private foundation or donor advised fund for your charitable giving. If you are over 70 1/2 and don’t need your full required minimum distribution for your living expenses, making a qualified charitable distribution directly from your retirement account is a great way to reduce your tax bill.


With the recent increase of the standard deduction thanks to the Tax Cuts and Jobs Act of 2017 you may find that you are no longer itemizing your tax deductions. You might consider "bunching deductions" such as property taxes and charitable contributions for multiple years into one year. This will allow you to alternate between claiming itemized deductions in "bunching" years and the standard deduction in "non-bunching" years, and reducing your tax bill over time.


Funding education costs for children or grandchildren is an important goal for many people. Often, funding a 529 plan comes with state income tax benefits, so making contributions before the end of the year is key. With the added flexibility of funding K-12 years (set at a $10,000 limit), 529 accounts become even more advantageous.


If you are over age 70 1/2 you need to take your required minimum distributions (RMDs) from your IRA or other retirement accounts each year. Calculations are based on your age and the value of your portfolio and the end of the previous year. Failure to take timely RMDs will result in a penalty of 50% of your missed distributions.

We hope these tips have begun to generate some insight to areas of your personal finance that need attention. For existing IAP clients, please know we are always looking at ways to take advantage of tax reducing ideas during our routine year-end planning for you.


bottom of page