Week 48: Wildcard Topic

What can you do this week?

• This whole post is about what to do before year end which is pretty much this week.

• Explore all the to-dos mentioned below and see if one or all applies to you.

• Carve out time to execute if so to set yourself up for success in 2025.

Do This Before Year End

Realize Gains?

• Long term capital gains are taxed at a lower rate than ordinary income. You can even pay 0% if your income is low enough. If you had a low income year, this could be a great way to benefit from the recent run up in stocks.

• 0% rate limit by your tax filing status in 2024:

  Single filers: Up to $48,350

  Married filing jointly: Up to $96,700

  Head of household: Up to $64,750

  

  Take Losses

  • Harder to come by for many this year but if your investment in a taxable account is worth less now than when you bought, you can sell to realize the loss.

  • Losses can offset ordinary income and be used to offset gains realized. Best part is losses can be carried forward for use in future tax years.

    

  Revisit 2024 Goals. Set 2025 Goals.

  Did you save what you intended for the year? If not, what got in the way and is there opportunity to do better in 2025?

• Sometimes life happens. Sometimes we just take our eye off the ball.

• For more about how to reach goals by breaking saving into small increments, try this post.

• For ways to grow your savings rate, look here.

• If you’re wondering if you need to maxout your retirement plan contributions, look here.

  

  Employer Benefits Check

• If you haven’t used your FSA funds, get on it so you don’t lose it. Here’s a list of eligible expenses.

• HSAs are a great way to get a deduction in before year end or in early 2025 like some IRAs do.

Tax Projection

• Make sure you are setup for 2025 withholdings by doing a tax projection. A simple way to do this is this IRS calculator.

• You can make sure you withhold enough so you don’t have a nasty tax surprise in 2026.

• This post is a good primer on some tax saving strategies you can employ in the new year too.

  

Get Charitable

Charitable giving is great anytime but by waiting until year end, if you own stocks in a taxable account you’ve been able to maybe collect dividends or see the value grow substantially that will then benefit your causes even more. Below are some solid tactics to consider:

• Donating appreciated stocks means you avoid paying taxes on the gains.

  • Your charity gets to use the full value of your shares.

  • A large gift of shares at year end can mean no need to write checks or give throughout the year thereafter.

  • The charity gets use of the full value of the donation at the outset of 2025.

• If you’re RMD eligible age, you can do a Qualified Charitable Deduction and avoid paying tax on that distribution.

• Bunching deductions can work hand in hand with charitable gifting too. Large charitable gifts can allow some clients to itemize in years when they usually don’t have enough deductions to do so at all.

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