Hail Mary Tax Planning Moves to Make Before the End of the Year

"Capital gains brackets run off income, not portfolio size, which is why a low-income year can make even large gains effectively free. Appreciated stock is the smarter charitable gift because it gives the charity full value while letting you bypass the capital gains tax entirely. Low-income years are ideal for Roth conversions since the tax cost is minimal and the long-term benefit is significant. Did you have a shitty year? I'm sorry if you did. But cheer up, buttercup, because it's tax planning time. We have just a few weeks left in the year to actually make a difference in the numbers that get reported on your tax return."

"Folks often come to me in January looking for help to reduce their tax bill and I'm so sorry to say that it is often too late! The way to impact the taxes you owe is to make moves during the calendar year of the tax year you will be filing for, in other words, before December 31st! But even this late in the game, if you're only starting to think about your taxes now, in my view, these are the best ways to change your tax outcome with about a month left in the year: Harvest Capital Gains or Losses Donate to Charity (Appreciated stock is best!) Roth Conversions"

Year-end tax planning can materially reduce reported tax liability by making moves before December 31. Capital gains tax brackets depend on taxable income rather than portfolio size, so a low-income year can make large gains effectively tax-free. Donating appreciated stock transfers full value to charity while avoiding capital gains taxes. Harvesting capital gains or losses can optimize tax outcomes within the current tax year. Converting traditional retirement assets to a Roth in a low-income year minimizes immediate tax cost while providing long-term tax-free growth. Prompt action in a short window can change the tax result for the year.

Read at Substack