by CA Miraj Baldha, CPA
2024-12-12
As the year 2024 draws to a close, it's essential to consider upcoming tax deadlines and opportunities that could significantly impact your returns. While there have been few tax law changes this year, life changes may have occurred that affect your taxes. Additionally, the looming November elections and their potential impact on the tax planning climate, coupled with the Tax Cuts and Jobs Act (TCJA) set to sunset at the end of 2025, make it crucial to plan ahead as current tax benefits may change soon.
Here are 10 tax planning and preparation moves to consider before year-end:
1. Consult with your tax, wealth, and insurance advisors about any life changes, such as moving, divorce, marriage, children, inheritance, or employment changes, which may affect your taxes and estate planning.
2. If affected by recent natural disasters, inform your tax professional about the scope and cost, even if you don't have complete information, to potentially claim losses on your tax return.
3. Consider the time spent in different states or countries, as this may affect your taxes, especially if you've spent more time than usual in a different location.
4. Complete your 2023 tax filing before the IRS e-file system shutdown date, typically in mid-November, to avoid delays and ensure a faster refund.
5. Discuss with your tax professional whether to use capital losses to offset realized gains, consider tax loss harvesting, or roll capital gains into a Qualified Opportunity Zone Fund to defer or reduce tax liability.
6. Defer compensation or income and maximize tax-deferred retirement contributions, such as 401(k) or IRA contributions, to reduce your tax burden.
7. Evaluate your estate, trust, and gifting strategies, considering the current lifetime gift and estate exemption, and potentially passing assets to heirs or making charitable donations.
8. Review your charitable giving strategy, potentially donating appreciated stock or "bundling" gifts to maximize itemized deductions.
9. Prepare for IRS delays by filing early, using electronic filing, and choosing direct deposit for the fastest refund, and monitor ongoing tax situations closely.
10. Stay in touch with your tax professional to ensure a smooth tax-filing process and make any necessary adjustments before year-end.
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