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Need More Coupons - MyLivingMagazine.comYear-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. ere 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 o set any gains you have incurred. You can also use up to $3000 to o set income if you do not have any capital gains to o set. Should you have more than $3000 in losses, the excess can be carried forward to o set 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 a er 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. is is when you take money from a Traditional IRA and move it to a Roth IRA. e 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. ere 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. is 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 quali ed public charities. Also, if you do not itemize you can deduct up to $300 for a single taxpayer and $600 if married.

ese are just a few year-end tax saving strategies that can be utilized to o set income. As always, please consult your Financial Advisor along with your tax professional before implementing any of the above strategies. Happy New Year to all who read this and nd it useful.

Money Talks

by Jay Chapman, CFP®

All the opinions expressed in this article are that of the authors and should not be considered nancial 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 Charting a Course For Your Future Which Investor Are You?

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