As the end of the year approaches, our thoughts also naturally turn to giving and planning for a brighter future for our loved ones and causes that are dear to us. That’s why it’s the perfect time to finish our Nepsis Year-End Checklist. In fact, some items are highly time-sensitive, and it is vital you check them before December 31st.
Remember, life is a journey, and every journey requires checking the map from time to time. A well crafted financial plan must also include a consistent review routine. Our goal at Nepsis is to help guide your journey. So as the year starts to come to an end, let’s go over Tax Planning, Giving Strategies and Estate and Legacy Planning:
TAX PLANNING
- Reduce Capital Gains with Tax-Loss Harvesting – Review your taxable non-qualified portfolio for capital losses that may be realized to offset capital gains. If capital losses exceed your gains, up to $3,000 can offset ordinary income, while further losses carry forward to future tax years.
Source: www.irs.gov/taxtopics/tc409
- Evaluate Deferral of Taxable Gains or Distributions – Review your tax situation and evaluate whether it may be advantageous to delay selling capital gain property or receiving taxable distributions until the following calendar year, i.e., January.
- Review Your Plan – If your itemized deductions are close to the standard deduction amount, you may want to consider bunching some deductions. This is where you pre-pay certain deductible expenses for next year such as medical expenses or charitable contributions. *Seek advice from your tax professional regarding your specific situation before implementing any “bunching” strategy.
- Catch up on Withholdings – You can designate up to 100% of an IRA distribution to be withheld for taxes, which the IRS considers as having been paid evenly throughout the year. This allows you to “catch up” on withholdings in a year when your tax liability is greater than expected.
Sources: www.irs.gov/publications/p505
www.thetaxadviser.com/issues/2018/mar/minimizing-estimated-tax-payments.html
www.law.cornell.edu/uscode/text/26/3405
GIVING STRATEGIES
- Complete Charitable Giving – If you want to “pre-fund” next year’s charitable giving to take the deduction this year, a Donor Advised Fund may be a good option. This allows you to complete the charitable gift this year, while actually disbursing the funds at a future time.
Source: https://www.irs.gov/taxtopics/tc506
- Consider Donating Appreciated Stock – A great option for charitable giving is to gift shares of appreciated stock. You’ll receive credit for the full value of the gift while avoiding the capital gains.
Source: https://www.irs.gov/taxtopics/tc506
- Complete Annual Exclusion Amount Gifting – If gifting of assets to your beneficiaries during your lifetime is part of your financial and estate plan, be sure to complete your gifts before year-end. The Annual Exclusion amount for 2024 is $18,000 per person.
ESTATE & LEGACY PLANNING
- Review Your Beneficiaries – Audit the beneficiaries listed on your accounts and insurance policies to be sure they are correct. A quick review can save an enormous amount of difficulty in the event they are incorrect and not updated.
- Evaluate Status of Your Estate Plan Documents – Life circumstances are constantly changing and the laws affecting your estate plan are also subject to revision. That’s why it’s important to review your estate plan every 3-5 years. If you have not done that, or if you have experienced life changes, plan to meet with your attorney for an estate plan review.
The Nepsis Year-End Checklist is designed to help you end your year with your financial house in order and start your year with clarity. We believe every investor’s two most important financial questions are: “Is my portfolio doing the best it can?” and “Am I on track to reach my goals?” A Nepsis® Advisor can help answer these vital questions with our Clarity Roadmap® Planning Process.
Advisory services offered through Nepsis, Inc.: An SEC Registered Investment Advisor.
DISCLOSURE: This checklist contains general suggestions related to your overall financial plan; however, you should consult with your tax professional and/or attorney regarding the implementation of any strategy pertaining to your specific situation.