Tips for year-end tax planning
Tax season tends to sneak up on everyone like Christmas. It happens every year. It happens at the same time every year, even on the same day. Yet people are always taken by surprise.
Don’t be taken by surprise this year. We’ve all heard the saying that if you fail to plan, you plan to fail. It’s true in all aspects of life, especially when it comes to tax planning.
CPA Practice Advisor put together a great article on how to start planning. It’s never too late to start talking to your clients, or yourself (we won’t judge), and the eight items that Andrew Cohen, JD, LL.M, mentioned in his article are a perfect place to start:
- Deferring your income and accelerating expenses.
- Bunching your deductions.
- Giving to charitable organizations.
- Loss harvesting against capital gains.
- Maximizing your retirement contributions.
- Consider investing in a Qualified Opportunity Zone.
- Selling capital assets.
- Accounting for 2019 TCJA changes.
Other ideas to consider when either talking to your clients (or yourself) about year-end tax planning include these tips from Intuit. Items to consider that were mentioned in their article:
- Tax deductions are great at lowering the amount of taxes owed. However, it may also kick in the Alternative Minimum Tax, and you must be aware of this possibility when planning. The AMT is affecting more and more middle-class citizens and is something about which you need to be concerned.
- Sell off underperforming investments to take the loss and offset any gains you may have this year.
- If you or your clients have kids, you’ll want to brush up on the kiddie tax rules.
- Check your flex plan accounts to see if your employer has granted a grace period allowed by the IRS.
These are just a few of the items that need to be considered when doing year-end tax planning. What are some of the items you look at when doing your tax planning?