It’s hard to believe, but once again it’s time to think about year-end and all the things you need to do to be ready for the 2023 tax season.  From remembering to make your final charitable donations to ensuring you fully funded your retirement accounts, there’s plenty to think about as we head into the final months of the year.

Below, we’ve outlined a host of items you should consider for your year-end planning.  As always, Perlson professionals are on hand to assist you with these or any other needs you may have as we close out 2023.

Important considerations with regard to year-end tax planning for 2023 

·     The last trading day of the year is December 29, 2023.  Be sure any desired transactions are made by that date in order to realize your capital gains or losses.

·     While harvesting capital losses, beware of the wash sale rules.

·     Complete any Roth IRA conversions.

·     Remember to take your Required Minimum Distribution (RMD) from your retirement accounts.

·     For the 2023 tax year, the standard deduction for Married Filing Joint taxpayers is $27,700, $13,850 for Single taxpayers and $20,800 for Head of Households.  If you plan to itemize deductions for 2023, keep those figures in mind.

·     In addition to donating cash, you can also contribute appreciated stock to charitable organizations.

·     If you are considering a large charitable contribution, consider setting up a Donor Advised Fund.

·     If the standard deduction exceeds your itemized deductions, consider contributing your RMD to charity.  This in effect results in a reduction of your taxable income.

·     Consider deferring your bonus to next year.

·     Be sure to fully fund your retirement accounts.

·     For 401(k), 403(b), and Governmental 457(b) plans, the maximum employee deferral contribution is $22,500 and the catch-up contribution for those 50 years of age or older is $7,500.

·     For traditional and Roth IRAs, the maximum contribution is $6,500 and the catch-up contribution is $1,000.  These can be funded as late as the filing date of your tax return not including extensions (April 15, 2024).

·     While you’re at it, also be sure to fully fund your 529 Plans for your children’s education.

·     If you have flexible spending accounts, zero them out before the end of the year.

·     Before year end, be sure to check your payroll tax withholding to ensure everything is correct.

·     Review your estimated tax payments and be sure to make your final payment for 2023 by January 15, 2024.

·     Make gifts to individuals by the end of the year. Be aware, however, that the annual gift tax exclusion for 2023 is $17,000.  Married couples are allowed to gift up to $34,000 tax-free.

·     The end of the year is often a great time to review your estate plan. If you don’t have an estate plan in place, consider creating one.

·     In addition, review your life, property and auto insurance coverage and premiums.

·     If you are over 60, Long Term Care insurance should be considered.

·     As of January 1, 2026, the estate, gift and generation skipping exemptions are scheduled to be reduced from approximately $13 million to $6 million.  If you haven’t used your exemption or only a portion of it, this is a good time to start planning additional gifts and transfers to reduce your taxable estate.

·     Review your qualified and non-qualified stock options as well as incentive stock for effective dates with regard to exercise and recent 409A valuations.

·     If you are a business owner, remember that bonus depreciation is sunsetting; try to take full advantage of this tax strategy sooner rather than later.

·     If you are considering a pension and or profit sharing plan; it must be set up by year end even though funding can be as late as the extended due date of your tax return.

·     If your business is on a cash basis for tax purposes, pay all your expenses and defer income. If your business is having a down year, defer expenses and accelerate income if possible.  

Contact your Perlson professional if you have any questions about year-end tax planning.  There are many factors to consider when engaging in tax planning.  Working with a Perlson professional will demystify your unique situation and help you develop a more well-rounded tax plan.  You can reach us at (516) 541-0022.