 Dear Valued Clients and Friends,
As the year draws to a close, it’s an excellent time to consider strategies to minimize your 2024 federal tax liability. Given the upcoming presidential election, there’s a possibility of legislative changes affecting tax laws. However, for now, we’ll assume the current tax code remains in place. We’ll keep you informed of any significant developments.
Here are some potential tax-saving opportunities to explore:
Review Your Tax Withholding and Estimated Payments
Ensure your federal income tax (FIT) withheld from paychecks and estimated tax payments for 2024 are sufficient to avoid underpayment penalties. We can help you estimate your 2024 tax liability and adjust your withholding accordingly.
Strategize Itemized Deductions
If your itemized deductions are close to the standard deduction, consider “bunching” them to exceed the standard deduction in alternate years. This can result in lower tax bills. Techniques include prepaying mortgage interest or property taxes and timing charitable contributions.
Optimize Investment Portfolio
Review your investment portfolio for potential tax-saving opportunities. Selling appreciated securities held for over a year can result in long-term capital gains, which are generally taxed at lower rates than ordinary income. Capital losses can offset gains. However, be mindful of the wash sale rules.
Maximize Charitable Giving
Charitable donations can reduce your taxable income. Consider donating appreciated assets or making qualified charitable distributions (QCDs) from your IRA.
Convert Traditional IRAs to Roth IRAs
Converting traditional IRAs to Roth IRAs can offer tax-free growth in retirement. However, consider the potential tax implications of the conversion.
Spend Flexible Spending Account (FSA) Funds
Use any remaining FSA funds before the plan’s year-end to avoid forfeiture
Leverage Annual Gift Tax Exclusion
Making annual gifts to loved ones can reduce your taxable estate. Consider the Kiddie Tax rules for gifts to minors.
Remember: Estate planning is crucial to ensure your assets are distributed according to your wishes. This letter provides a general overview. Consult with us for personalized tax advice tailored to your specific situation. We’re here to assist you in optimizing your tax strategy and minimizing your tax burden. Please don’t hesitate to contact your Duffy Kruspodin advisor if you have any questions.
Sincerely,
DUFFY KRUSPODIN, LLP |
