Year-End Tax Considerations

Now that we’re in the fourth quarter, it’s time to think about what you can do to help minimize your liabilities for the 2019 tax season and position finances for next year. The following is a sample of the usual methods. However, if you’d like us to take a more personalized, comprehensive approach, we’d be happy to review your financial portfolio with your tax professional and make tailored recommendations for year-end planning.

First of all, don’t forget to take your annual required minimum distributions (RMDs) from retirement accounts if you’re over age 70 ½. You’ll need to take them by Dec. 31 to avoid a 50% penalty on required amounts not taken. If you haven’t yet, consider automating your RMDs so they are calculated and deposited into your bank account each year without you having to do anything.1

If you are between ages 59 ½ and 70 ½ and already retired, one way to help reduce your future tax bill on retirement accounts is to go ahead and start taking distributions. This is especially advantageous if you’re in a lower tax bracket now than you will be when you begin combining income from RMDs, Social Security benefits and other sources. Withdrawing income from those accounts now may enable you to delay starting Social Security so that benefit can accrue. By reducing your account balances, future RMDs may have a lower impact on your taxes.2

If you’ve experienced any “paper losses” in your investment portfolio this year, you may want to speak with your registered representative and consider selling those securities before year-end to harvest losses for tax purposes. The IRS allows taxpayers to deduct up to $3,000 in losses from ordinary income and carry forward any unused loss amounts to future-year tax returns.3

If you harvest any gains or losses by year-end, you also may want to rebalance your portfolio to ensure it remains aligned with your strategic asset allocation to help you achieve long-term goals.

If you are planning to make charitable contributions, you may want to “bunch” cash donations that you would typically make over several years in order to qualify as a tax deduction in 2019. Remember that your donations will need to exceed your (now almost doubled) standard deduction in order to qualify. Also, consider donating highly appreciated securities or gifting your RMD as an alternative to cash contributions.4

Content prepared by Kara Stefan Communications.

1  Raymond James. Sept. 17, 2019. “Check This List – Twice – Before Year-End.” Accessed Oct. 9, 2019.

2  Miriam Cross. Kiplinger. Oct. 3, 2019. “How to Downsize Your RMDs.” Accessed Oct. 9, 2019.

3  Russ Wiles. AZCentral. Sept. 29, 2019. “10 financial tips to follow as the calendar turns to fall.” Accessed Oct. 9, 2019.

4  Kristin McKenna. Forbes. Sept. 25, 2019. “It’s Time For Year-End Financial Planning.” Accessed Oct. 9, 2019.

This content is designed to provide general information on the subjects covered. It is not, however, intended to provide specific tax advice and cannot be used to avoid tax penalties or to promote, market or recommend any tax plan or arrangement. You are encouraged to consult your personal tax advisor.

We are an independent firm helping individuals create retirement strategies using a variety of insurance and investment products to custom suit their needs and objectives. This material is intended to provide general information to help you understand basic financial planning strategies and should not be construed as financial or investment advice. All investments are subject to risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values.

The information contained in this material is believed to be reliable, but accuracy and completeness cannot be guaranteed; it is not intended to be used as the sole basis for financial decisions. If you are unable to access any of the news articles and sources through the links provided in this text, please contact us to request a copy of the desired reference.


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