Shah CPA Firm, PLLC

There are some moves you can do at year-end which will result in a better tax experience when you file your taxes next year. The more familiar you are with your taxes, the more likely you will be able to leverage year-end tax planning strategies. Always remember to consult your rock star CPA - Neeraj Shah - to navigate moves specific to your tax situation. In the meantime, here are a few planning moves to consider.

General Planning Advice and Responsible Actions:

1. Lower Taxes over both current tax year and next - good tax planning generally requires looking at taxable income and tax brackets. Be aware of potential opportunities of lower tax brackets or risks of higher brackets. A common approach is to accelerate write-offs in current tax years, and defer income to future tax years. Consult your rock star CPA Neeraj Shah to strategize the best plan for you. 
2. Consider Bunching Charitable Contributions - For those who are straddling the standard deduction, it may be savvy to bunch charitable donations in one year instead of splitting evenly across two years. This move could maximize standard deduction in one, and maximize itemized deductions in another year. Understand the dollar impact before changing your philanthropy habits - consult your rock star CPA. 
3. Green Energy Credits - 2023 is the first year that the new Energy Efficiency Home Improvement Credit is available. Qualified improvements may include doors, windows, and other property. Another credit available is the Residential Clean Energy Credit. The more broadly applied credit for electric vehicles was eliminated, and in its place are two new credits with much more stringent requirements.
4. Check Withholdings - Double check your pay-stub and make sure that you are withholding enough on your federal and state income via your paycheck. Not withholding enough could subject you to penalties at time of filing - consult your rock star CPA to better understand your tax exposure. 
5. Good Recordkeeping - gathering tax documents throughout the year and having an organized recordkeeping system will prove to be very useful come tax time. This includes tax-related records (earnings statements), IRS letters and notices, and businesses or rental profit and loss detail. 
6. Make Address and Name Changes - Notify the postal service, employers and the IRS of any address change. Use Form 8822 to report any changes. Also, you should report any name changes to the Social Security Administration. 

Investment-related Year-end Tax Planning:

1. Save for Retirement - Saving for retirement can lower your adjusted gross income and taxable income. In addition to tax benefits, having a retirement nest egg is surely going to be helpful later in life. Some retirement vehicles have a December 31st firm deadline - be aware.
2. Offsetting Gains with Losses - Some people call this move "tax-loss harvesting" - but whatever you call it, the main point is consider selling investments that show paper losses (down in your portfolio) to offset realized gains on other investments. Keep in mind that you can generally deduct a maximum of $3,000 of capital losses every year.
3. Spread Capital Gains over Multiple Years - You may be able to spread your capital gains over 3 years by selling part of your positions in a little over 12 months. Consider selling part of the asset in December of the current year, January of the next year, and finally the last in January of the third year. This strategy will help ease your tax burden.
4. Leverage Low Long-term Capital Gains Rates - Taxes on long-term capital gains are generally at a preferred rate, and the last comprehensive reform placed this tax at a historically low rate. Depending on your taxable income, your long-term capital tax rate can be 20%, 15% or even 0%. Consult your rock star CPA Neeraj Shah to make your dollars travel further!
5. Roth IRA Conversion - Sometimes converting from a traditional IRA to a Roth IRA makes sense - not always. Be aware of the current income tax implications and the rules for conversion before you pull the trigger. Plenty of good things go with the Roth IRA - namely, tax-free distributions in the future, without any required minimum distributions (RMDs). Consult your rock star CPA Neeraj Shah to understand the pros and cons.

Wealth and Estate Planning Year-end Strategies:

1. Annual Exclusion - The annual exclusion increased to $17,000 for 2023. This means that each person can give this amount without considering their lifetime exclusion. Married couples can give double this amount in total. It is a very efficient way to move dollars from one generation to the next - you will be rewarded for your disciplined strategy!
2. Tax Cuts and Jobs Act - the party may come to an end. The gift and estate tax exemption was doubled in 2018. This increase is about to sunset in 2026 - unless Congress acts. Those who want to leverage the higher exemption amounts should consider making inter vivos gifts (during one's life) soon.
3. Direct Payment of Tuition and Medical Expenses - direct payments for tuition and medical expenses are not considered taxable gifts. These transactions do not eat into your annual exclusion, nor does it impact your lifetime exclusion. It's a freebie!
4. Retirement Savings regarding SECURE Act 2.0 - Most of the changes regarding SECURE Act 2.0 don't apply until 2024 tax year. However, there is one change that applies to 2023 - an increase in age at which required minimum distributions (RMD) must begin. The age is increased to 73 for those who turn 72 after 2022 and age 73 before 2033.

You are probably paying more for your tax preparation than our rates. We are here to support you, and we won't let you down. Don't opt for an inferior product; your refund depends on it!​ Don't wait until you get all your forms.