2024 Year-End Planning Checklist

Prioritize Retirement Planning by considering Required Minimum Distributions (RMDs), Qualified Charitable Distributions (QCDs), making both employer and employee plan contributions, and Roth IRA conversions.

• RMDs: Understand that you’ll need to start taking required minimum distributions from your retirement accounts when you reach a certain age.

• QCDs: If you’re 70½ or older, consider making qualified charitable distributions directly from your retirement account to charities to avoid taxes.

• Contributions: Make sure to take advantage of contributions from both you and your employer to your retirement accounts.

• Roth IRA Conversions: Think about converting some of your retirement savings to a Roth IRA, from which you can take tax-free withdrawals in the future.

Boost your Charitable Deductions through the techniques below. Just remember to keep good records of your contributions and obtain qualified acknowledgement letters from the recipient charities.

• Contributing to donor-advised funds (DAF): You can donate to a DAF before year-end, take a charitable deduction in 2024 and decide next year (or later) how much you would like your DAF to donate to qualified charities.

• Gifting appreciated securities: Instead of selling stocks or mutual funds and paying tax on the gains, consider donating the securities in-kind to charity. As long as the security has been held for longer than a year, you can avoid tax on the gain and get a deduction for the full fair market value of the securities donated.

• Making non-cash gifts: If you donate non-cash, non-marketable security items like home goods, furniture, artwork, real estate or collectibles that are worth $5,000 or more, you can get a tax deduction based on the fair market value of the items donated, but you must have the items appraised by a qualified appraiser. Additionally, the appraiser and the receiving charitable organization will both need to sign a portion of your tax return.

• Using state tax credits: Many states offer generous tax credits. Unlike a deduction that reduces your taxable income, these credits can directly offset the tax you would otherwise owe. Take advantage of any state tax credits for your charitable donations, and make sure to keep good records of all your gifts.

Minimize your eventual estate tax by taking advantage of Annual Exclusion Gifting to transfer wealth without incurring gift tax.

In 2024, each person can give up to $18,000 to another person without incurring a gift tax. This means a married couple can give a combined $36,000 to any individual and can make additional $36,000 gifts to as many people as they wish. This rule not only helps lower the value of your taxable estate but also allows you to assist your loved ones in things like starting a business, buying a home, or large expenditures.

Deduct Investment Interest Expense to reduce your taxable income from investments and businesses.

If you have a loan or line of credit that has been used for investment purposes, consider paying unpaid interest so that you can deduct the interest payments in 2024. Generally, interest from loans where the proceeds were used to fund or acquire businesses and/or investments is deductible.

Contribute to 529 Plans before year-end.

If you’re thinking about contributing to a 529 college savings plan, be sure to make your contribution before the end of the year. Many states offer deductions or credits for these contributions, and the funds can grow tax-free, maximizing your savings for education expenses.

Defer income and accelerate deductions to optimize your tax savings.

If you wait to receive income until next year, you might lower your taxable income for this year, which could help you move to a lower tax bracket. At the same time, think about speeding up your deductions by paying some expenses early or making charitable donations before the year ends. By doing so, you can reduce the taxes you pay over the two years combined.

Be thoughtful about Trust Distributions to make sure beneficiaries get what they’re supposed to while keeping tax rules in mind.

Trusts are taxed at a high rate of 37% when they have $14,451 or more in taxable income. When money is distributed from a trust to a beneficiary, that income is transferred to the beneficiary. If the beneficiary is in a lower tax bracket than the trust, a distribution can lower the combined taxes paid by the trust and the beneficiary.

Use your Flexible Spending Accounts (FSA) to prevent losing any of your funds.

Absent special exceptions, if FSA funds are not used by the end of the year, you forfeit the money. To avoid losing your money, check with your employer to see if there are special circumstances that will allow you to roll over a portion of the funds or if there is an extension that would allow you to use the funds in early 2025. Otherwise, consider spending on elective medical, dental or mental health care that you have been putting off.

Optimize your business tax planning by taking advantage of Qualified Business Income (QBI) deductions and considering Pass-Through Entity (PTE) payments.

• Qualified Business Income (QBI) Deductions: If you own a business, you may be able to deduct up to 20% of your qualified business income, which can lower your taxable income and save you money on taxes.

• Pass-Through Entity (PTE) Payments: For businesses like sole proprietorships, partnerships, and S corporations, profits pass directly to your individual tax return, meaning you to pay taxes on your business income at your individual tax rate.