By Eric Reich
I can’t believe I’m talking about the end of the year already, but here we are. I hope everyone had a great 2023, and I wish you an even better 2024. This week I thought we would cover some ways to help make 2024 better for your finances.
- Make charitable donations. Since this is the season of giving, it’s worth noting that those gifts can potentially provide some nice tax breaks as well. Look to make gifts from IRAs via a Qualified Charitable Deduction (QCD) if you’re over age 70 ½. Gift highly appreciated assets if they aren’t coming from an IRA. Both of these ideas can help to maximize the tax benefits of your gifts.
- Max out your contributions to your retirement plans if you haven’t already. Many employers will allow you to defer a bonus or additional income at the end of the year to help get you up to the limit. Make sure you do the same with your IRAs, whether they are traditional or Roth. The sooner you start maxing out these plans, the sooner you can retire.
- Max out your Health Savings Account (HSA) if you have one. HSAs are a great way to pay for your medical expenses since those qualified expenses can essentially be made with pre-tax dollars. It’s like buying those items at a big sales discount price.
- Tax loss harvesting. If you have investments in non-retirement accounts, you can sell investments that are “down” in order to offset your capital gains. If you don’t have any gains to offset, you can apply up to $3000 of those losses against your ordinary income!
- Defer or accelerate income. If you’re self-employed, try to defer income if you’ve already made a lot this year. Conversely, if you have had a bad year and are likely to pay less in taxes than normal, take advantage of the lower rates by accelerating some of next year’s income into 2023. This can include gains on your investments. You can sell them today, and buy them back 31 days later to recognize a gain at a potentially lower tax rate and increase your cost basis when you buy it back later which could lower your future taxes when you eventually sell the investment in the future someday.
- Make gifts to your children/grandchildren. This year the annual gift limit without having to file a gift tax return is $17,000. This can help to reduce your estate and help your children at the same time. Also, if you gift them appreciated assets like stock and they have less than $200 in income, they could potentially sell it without paying capital gains tax. Remember, if you make a gift to them, they must cash the check in 2023 for it to count!
As with anything tax related, talk with your CPA before making any tax decisions. I always say it is good practice to meet with your CPA well before the end of the year. I like to suggest meeting with them around the end of October or the beginning of November so that you have time to implement the strategies your CPA suggests.
Securities offered through Kestra Investment Services, LLC (Kestra IS), member FINRA/SIPC. Investment advisory services offered through Kestra Advisory Services, LLC (Kestra AS), an affiliate of Kestra IS. Reich Asset Management, LLC is not affiliated with Kestra IS or Kestra AS. The opinions expressed in this commentary are those of the author and may not necessarily reflect those held by Kestra Investment Services, LLC or Kestra Advisory Services, LLC. This is for general information only and is not intended to provide specific investment advice or recommendations for any individual. It is suggested that you consult your financial professional, attorney, or tax advisor with regard to your individual situation. To view form CRS visit https://bit.ly/KF-Disclosures.
Eric is President and founder of Reich Asset Management, LLC. He relies on his 25 years of experience to help clients have an enjoyable retirement. He is a
Certified Financial Planner™ and Certified Investment Management AnalystSM (CIMA®) and has earned his Chartered Life Underwriter® (CLU®) and Chartered Financial Consultant® (ChFC®) designations. A lifelong resident of Cape May County, Eric resides in Seaville, NJ with his wife Chrissy and their sons ,CJ and Cooper, and daughter Riley.
