Are you interested in learning about year-end tax strategies so that you can minimize your tax burden? Although we are early in the year, it’s never too soon to think about options you have to reduce your tax due. But be sure to take action no later than December 31st to include in this tax year’s return. 

Tax-Loss Harvesting. This is a strategy that investors can use to lower their current taxes paid by deliberately selling an investment at a loss. This loss is then used to offset taxes owed on an investment sold at a profit. However, it is important to watch out for what’s called the wash-sale rule. This regulation states that individuals must wait 30 days before or after selling to purchase the same or identical security. 

Tax-Free Roth: Tax-Free Roth accounts are a very popular strategy that wealth advisors recommend. You could consider converting your traditional individual retirement account or your employer-sponsored 401(k) to a tax-free Roth. You would then pay the tax now and watch your money appreciate. From there, no tax will be due on withdrawals once you’ve held it for at least five years and are 59 ½ years old or older. 

Take advantage of inflation: Now that consumer prices are the highest they have been in four decades, the IRS has drastically changed the income levels at which a specific tax rate is used. This means that you may notice you are just barely in a new bracket for 2023 and you may see your payments decrease. You may also be able to increase the amount of money you pass to your heirs tax-free. 

For example, in 2023, you can give each person up to $17,000 without the “gift” affecting your lifetime exemption of just over $12.9 million. This is the level at which the 40% estate tax applies. 

Be sure to keep these strategies in mind throughout the year. If you have questions regarding the options you should use, be sure to meet with your financial planner. You will need to take action before the end of the year to receive the benefits for 2023. 

If you don’t have a financial advisor you trust, reach out to me for a referral at 310-534-5577 or

Pin It on Pinterest

Share This