By Jeffrey R. Wolfe, Senior Vice President and Manager, Wealth Planning Strategies
Unless you filed for an extension, or live in Maine or Massachusetts, congratulations! The 2023 tax season is over! While taking a quick mental break from the “taxing” task of completing your taxes, now is a great time to review your tax situation going forward. Take what you’ve learned from this year and use the rest of 2024 to plan for your filing next year. Review your strategies to make sure your tax situation is in its best shape going forward, and consider consulting with your tax professional regarding any other modifications to your tax planning, such as:
- Did you go it alone this year? Was it worth it? Consider whether you should engage a tax professional for tax year 2024.
- Consider whether to take certain gains or losses in this taxable year. Choosing the appropriate time to take such actions can help control your potential tax liabilities.
- Look at fully funding employer-sponsored plans and/or tax-deductible IRAs. Maximizing these contributions may lower your tax bracket. Small business owners with no existing employer-sponsored retirement plan should consider establishing one and taking advantage of generous tax credits introduced by recent legislation to help small business owners with some of the startup cost for retirement programs.
- Review Roth retirement planning options. Converting existing pre-tax assets to a Roth IRA, funding a Roth IRA or, if it is available, use Roth salary deferral contributions through your 401(k), 403(b) or 457(b) plan now. These techniques may provide more after-tax cash flow during retirement. Recall, though, once you make a Roth conversion, it cannot be undone.
- Consider tax-advantaged annuities or qualified longevity annuity contracts (QLACs) to provide lifetime income guarantees.
- Think about the location of your assets. Perhaps mutual fund investments are more pragmatic in a tax-deferred account than a taxable account for your situation.
- For higher income earners, review your withholdings and your passive investments and make sure you address any potential Affordable Care Act Taxes or the cap on your state and local tax deductions.
Taxes are one of the two guaranteed things in life, so you must continue to deal with them.
Stay diligent and review your situation with your tax advisor and your financial advisor throughout the year to put together a plan that is right for you.
IMPORTANT DISCLOSURES: The information provided is based on internal and external sources that are considered reliable; however, the accuracy of this information is not guaranteed. This piece is intended to provide accurate information regarding the subject matter discussed. It is made available with the understanding that Benjamin F. Edwards is not engaged in rendering legal, accounting or tax preparation services. Specific questions on taxes or legal matters as they relate to your individual situation should be directed to your tax or legal professional.