Updated: Dec 6, 2022
Year end strategies that savvy investors and portfolio managers use.
Tax Loss Harvesting
Charitable Giving Grouping
Review Student Education 529b plans Plan
Retirement Distributions (RMD)
Health Care Expensing and Planning
Retirement Plan Contributions
Estate Plan Review
Tax Loss Harvesting.
This years market decline has certainly given a blow to some of the most conservative investment portfolios. One way to take advantage of the valuation declines is to evaluate your holdings. Rebalance the assets and use the benefits the IRS offers.
Here is the rule and links to the IRS:
If your capital losses exceed your capital gains, the amount of the excess loss that you can claim to lower your income is the lesser of $3,000 ($1,500 if married filing separately) or your total net loss shown on line 16 of Schedule D (Form 1040). Claim the loss on line 7 of your Form 1040 or Form 1040-SR. If your net capital loss is more than this limit, you can carry the loss forward to later years. You may use the Capital Loss Carryover Worksheet found in Publication 550, Investment Income and Expenses or in the Instructions for Schedule D (Form 1040)PDF to figure the amount you can carry forward.
Charitable Giving information and links to the IRS:
Generally, you can only deduct charitable contributions if you itemize deductions on Schedule A (Form 1040), Itemized Deductions.
Gifts to individuals are not deductible. Only qualified organizations are eligible to receive tax deductible contributions. To determine if the organization that you contributed to qualifies as a charitable organization for income tax deduction purposes, refer to our Tax Exempt Organization Search tool. For more information, see Publication 526, Charitable Contributions and Can I Deduct My Charitable Contributions?
Review Student Education 529b plans Plan Information and link to IRS:
A qualified tuition program (QTP), also referred to as a section 529 plan, is a program established and maintained by a state, or an agency or instrumentality of a state, that allows a contributor either to prepay a beneficiary's qualified higher education expenses at an eligible educational institution or to contribute to an account for paying those expenses. Eligible educational institutions can also establish and maintain QTPs but only to allow prepaying a beneficiary's qualified higher education expenses. Qualified higher education expenses generally include expenses required for the enrollment or attendance of the designated beneficiary at any college, university, vocational school, or other postsecondary educational institution eligible to participate in a student aid program administered by the Department of Education. In addition, for purposes of QTPs, qualified higher education expenses include tuition expenses in connection with a designated beneficiary's enrollment or attendance at an elementary or secondary public, private, or religious school, i.e., kindergarten through grade 12, up to a total amount of $10,000 per year from all of the designated beneficiary's QTPs. They also include expenses for fees, books, supplies, and equipment required for the participation in an apprenticeship program registered and certified with the Secretary of Labor and qualified education loan repayments in limited amounts.
Other Ideas include deferring you year end bonus if you think you'll be in a lower tax bracket next year.
IRA Required Minimum Distributions Information and link to IRS:
Use this worksheet to figure this year’s required withdrawal from your (non-inherited) traditional IRA UNLESS your spouse1 is the sole beneficiary of your IRA and they’re more than 10 years younger than you.
Deadline for receiving required minimum distribution:
Year you turn age 72 (70 ½ if you reached 70 ½ before January 1, 2020) - by April 1 of the following year
All subsequent years - by December 31 of that year
IRA balance2 on December 31 of the previous year
Distribution period from the table (Table III) for your age on your birthday this year.
Line 1 divided by number entered on line 2. This is your required minimum distribution for this year from this IRA.
Repeat steps 1 through 3 for each of your (non-inherited) IRAs.
Once you determine a separate required minimum distribution from each of your (non-inherited) traditional IRAs, you can total these minimum amounts and take them from any one or more of your (non-inherited) traditional IRAs.
RMDs were waived for 2020. If you reached age 70½ in 2019 and delayed taking your first RMD until April 1, 2020, that RMD was waived. Your 2021 RMD was due by December 31, 2021.
For additional information, see:
Publication 590-B, Distributions from Individual Retirement Arrangements (IRAs)
Retirement Topics – Required Minimum Distributions
Note: For other retirement plans contribution limits, see Retirement Topics – Contribution Limits.
$6,500 ($7,500 if you're age 50 or older), or
If less, your taxable compensation for the year
$6,000 ($7,000 if you're age 50 or older), or
If less, your taxable compensation for the year
The IRA contribution limit does not apply to:
Qualified reservist repayments
Deducting your IRA contribution
Your traditional IRA contributions may be tax-deductible. The deduction may be limited if you or your spouse is covered by a retirement plan at work and your income exceeds certain levels.
IRA deduction limits
Roth IRA contribution limit
In addition to the general contribution limit that applies to both Roth and traditional IRAs, your Roth IRA contribution may be limited based on your filing status and income.
2023 - Amount of Roth IRA Contributions You Can Make for 2023
2022 - Amount of Roth IRA Contributions You Can Make for 2022
IRA contributions after age 70½
For 2020 and later, there is no age limit on making regular contributions to traditional or Roth IRAs.
If you file a joint return, you may be able to contribute to an IRA even if you didn’t have taxable compensation as long as your spouse did. Each spouse can make a contribution up to the current limit; however, the total of your combined contributions can’t be more than the taxable compensation reported on your joint return. See the Kay Bailey Hutchison Spousal IRA Limit in Publication 590-A.
If neither spouse participated in a retirement plan at work, all of your contributions will be deductible.
Estate Plan Review:
We can plan trusts for your children, avoid having to go through the probate process at death, avoid government payback of your assets, protect against creditors, keep your assets and your distributions private, and a bunch of other great things! Call our office to schedule a consultation today.
Your family will be thankful.
Often I'm approached by people that feel they don't need financial advice. Most of the time it's because they feel like they don't have enough money. That's when I simply say STOP!
Everyone needs to have at least the very basics covered. No matter how poor they feel. Some have even inquired about a simple do-it-yourself option to help them get started on their own. Now days you can't even see a Doctor or go to the Emergency Room of your local hospital without being asked "do you have a "Durable Power of Attorney" or "Health Care Directive".
Most of you know of my passion for sailing. You wouldn't go to sea without a life jacket or a life raft would you? Anyone who has been here on planet earth for the past few years certainly has witnessed things that no one ever expected to see in their lifetime. Earlier this summer I offered the "Procrastinators Guide to Estate Planning". It's FREE!
Don't misunderstand our focus is Wealth Management and Financial Planning. I have many friends and client associates who are attorneys. This information in this blog post is in no way meant to take the place of their services and advice. At the very least you should have the "Health Care Directive" and or a "Durable Power of Attorney". A Will is also very important. Choose your executors, trustees or other representatives carefully. Make sure the contact information for them is up to date. Review all accounts and insurance policies and name your beneficiaries.
Need help? I'll be happy to guide you. Remember Akin Investments is a fiduciary advisor. We sell no insurance or financial products. Your success is our only interest!
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