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Year-End Tax Planning 2021
Have you done all your tax-planning for the end of the year? It is not too late if you have not. There are several things you can do to potentially reduce your taxable income. Please consult with your CPA or tax advisor for advice before the end of the year. It could save you a big tax bill. I always preach having a strategy and when it comes to lowering your tax bill you should have a strategy that best suits your long-term needs. If you have any securities that have a loss, you can do some tax-loss harvesting. Investment losses can be used to offset any gains you have incurred. You can also use up to $3000 to offset income if you do not have any capital gains to offset. Should you have more than $3000 in losses, the excess can be carried forward to offset future capital gains. Another tax-reducing strategy would be to contribute to a tax-advantaged account. Take advantage of your 401(k) or 403(b). Contributions are not taxed and will grow tax-deferred until you take distributions. If you are in a lower tax bracket, consider making those contributions to the Roth component of your plan, should you have that option. Roth contributions are after tax, but they grow tax-free. Self-employed taxpayers should utilize a SEP IRA or an Individual 401(k). You could also consider doing a Roth conversion in 2021. This is when you take money from a Traditional IRA and move it to a Roth IRA. The amount of money that is moved will be taxable, but if you are in a lower tax bracket in 2021, it might make sense to do this. There is legislation in Washington that is proposing to eliminate Roth conversions in the future. For those of you who are 70 ½ and older, you could consider making charitable donations directly from your IRA up to $100,000. For one, this counts towards your Required Minimum Distribution. By doing this, you will not pay taxes on those charitable withdrawals, and you could reduce the amount of future Required Minimum Distributions. Please note that the Required Minimum Distribution age recently changed to 72, so make sure you qualify before utilizing this strategy. This strategy should be used by taxpayers who do not itemize deductions. For those that do itemize, you can make cash contributions to charities. Up to 100 percent of your AGI can be deducted for cash contributions made to qualified public charities. Also, if you do not itemize you can deduct up to $300 for a single taxpayer and $600 if married.
Money Talks by Jay Chapman, CFP® All the opinions expressed in this article are that of the authors and should not be considered financial advice for your individual portfolio. If you would like to learn more about this topic or have your complimentary portfolio reviewed please contact Jay Chapman, CFP® at Chapman
Capital Advisors
772-320-9658 or email Jay@ChapmanCapitalAdvisors.com
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Where Experienced Advice Meets These are just a few year-end tax Actionable Ideas! saving strategies that can be utilized to offset income. As always, please THE ANCHOR TO A STABLE FINANCIAL FUTURE consult your Financial Advisor along Call for a Complimentary Consultation Today! with your tax professional before implementing any of the above 772-320-9658 3727 SE Ocean Blvd., Suite 204, Stuart strategies. Happy New Year to all who www.ChapmanCapitalAdvisors.com read this and nd it useful.2022 All Rights reserved. To Advertise call 772-617-4960 Copyrighted© My fi Living Magazines. VOL. 532 M 35
