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Time for Tax Planning

Time for Tax Planning

October 17, 2023

The purpose of tax planning is to minimize taxes for the current tax year and/or over your lifetime, and best time is during the last few months of the year.  Here are some examples of tax planning:

  • Roth Conversions: moving $ from pre-tax accounts to Roth accounts in lower-income years in order to lower your future tax liability
  • Mega Backdoor Roth Contributions: supercharging your tax-free retirement savings by utilizing the $66k overall IRS limit on 401ks
  • Capital Gain Harvesting: joint tax filers have a 0% capital gains tax rate if their taxable income is less than $89,250
  • Capital Loss Harvesting: reducing current year taxes by selling investments at a loss and reinvesting in a similar investment
  • QCD's: if you're at least 72, you can donate to charity directly from your IRA as a tax-free withdrawal and it counts as your RMD

Tax planning can also be as simple as:

  • Increasing your paycheck withholdings or making estimated tax payments to avoid underpayment penalty
  • Maximizing your retirement plan contributions
  • Making an IRA, Roth IRA, or backdoor Roth IRA contribution
  • Making HSA, FSA, and 529 college savings contributions

Get in touch to learn more or to see if HWM can help.

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