Year End Tax Planning

Only 73 days left until the end of the year! Below are some tax savings strategies that you will want to take advantage of before year end.

1) Solo 401k: If you are a solopreneur, you can contribute to a Solo 401k plan twice, up to a limit of $69,000 in 2024. Put away up to $23,000 as the employee, and up to 25% of your income as an employer match. This can generate tremendous tax savings.

2) Sole-prop vs. S-Corp: If you are a single person company, you probably registered as a sole-prop LLC. But did you know that there could be significant tax savings by electing to be taxed as an S-Corporation?

3) REIT Dividends: If you claim the Qualified Business Income (QBI) deduction, you can add 20% of qualified REIT dividends to the 20% QBI deduction.

4) Roth Conversions: If you are in a low tax year, due to a drop in income, you may want to convert your Traditional IRA into a Roth IRA. You will pay (low) income tax on it today, but it won’t be taxed again. Ever.

5) 529 College Savings Plans: Enjoy tax-free growth and withdrawals, if the money is used for a qualified college expense like tuition, room & board, etc. Also, depending on your state, you may be eligible for a tax deduction this year (see the map below for details).

6) Portfolio Management: Sell your active mutual funds, which have high taxes, and buy tax-efficient ETFs instead.

7) Health Savings Account (HSA): Triple tax-exempt. Funded with pre-tax money, grows and withdrawn tax-free, as long as it is used to pay for qualified medical expenses.

If you would like to discuss tax planning further, click Book A Meeting.

Some states have significant tax deductions when contributing to a 529 account.