Taxes are an important consideration when it comes to managing your finances. Being proactive with your tax planning can help you manage your obligation and put you in a better financial position for the future. Here are some tax planning tips you may be able to take advantage of this year. Be sure to consult with a tax professional or financial advisor to maximize your strategy.

Harvest Investment Losses

Do you own any investments that have lost money this year? If so, you may be able to sell them before the end of the year and claim a deduction from your income taxes by tax-loss harvesting.

Tax-loss harvesting entails strategically selling investments to realize a controlled amount of losses and then using those losses to offset the taxable gains you’ve realized over the same period. After harvesting losses, consider replacing the assets you sold with others that complement your financial goals. Those replacements must meet certain requirements, though. As part of the wash-sale rule, the IRS imposes a 30-day waiting period from the time of sale before you’re able to purchase a “substantially identical” asset to the one you sold. Failure to meet these requirements may preclude you from claiming your investment losses for tax purposes.

This can be a useful strategy for realigning your portfolio but it’s often complex to implement, so be sure to consult with a financial professional.


Maximize Contributions to Tax-Advantaged Accounts

Tax-advantaged accounts like IRAs, employer-sponsored 401(k)s, Health Savings Accounts HSAs), and 529 college savings plans offer unique tax incentives for investing toward long-term goals. Making use of these different accounts can provide you with tax savings while helping you stay on track to hit important financial milestones like your retirement or your child’s education.

There are annual contribution limits associated with each account. If you’re over the age of 50, you may qualify for “catch-up” contributions that allow you to contribute more. Some employers offer to match a portion of your 401(k) contributions and if your employer is one of them, consider contributing enough to your 401(k) each pay period to maximize your employer match.

Make Annual Gifts

The annual gift tax exclusion designates the amount you’re allowed to gift others (such as your children or grandchildren) each year on a tax-free basis without those gifts counting against your lifetime gift tax exemption. This tax exclusion can be a tax-efficient way of passing assets down to your heirs.

Gifts are priced based on their fair market values for tax purposes, not the cash values you acquired them for. There’s no limit to the number of people you can make these annual gifts to, meaning you can give up to the annual limit to each of your children and grandchildren if you choose to.

Give to Charity

Donations to qualified charitable organizations can be deducted from your income taxes and potentially lower your tax burden for the year those donations are made. Charitable gifts can be made with cash or other financial assets like stocks, bonds, or even real estate. As an alternative to simply making a donation, you can consider using a Donor-Advised Fund DAF or private foundation to support the causes you believe in.

If you’re currently taking Required Minimum Distributions RMDs) from an IRA, 401(k), or another tax-deferred account, you have the option to donate directly from the account to a qualified charity of your choice instead of claiming the RMD as income.


Claim Other Deductions and Credits

In many cases, itemizing deductions on your taxes can be more advantageous than simply claiming the standard deduction. In addition to the various deductions you may receive for contributing to tax-advantaged accounts or making charitable distributions, there are countless expenses that may entitle you to further deductions or tax credits this year. A financial advisor can help you decide what to itemize on your tax return.

Of course, you may still decide to claim the standard deduction if it’s greater than the value of these items.

Work With a Professional

In preparation for the next tax season, consider working with someone who can help position the various elements of your financial plan in a tax-efficient manner. A tax or financial professional can help you navigate the complexities of tax planning and identify areas where you might be able to save.


Exemplar Tax Services for Small Businesses

Exemplar tax and accounting experts work with each client to provide innovative and creative solutions tailored to the needs of your business. We use an holistic approach to building your organizations financial foundation with the end goal of sustainability and growth for your business. To learn more about your tax planning options or discuss how some of these strategies may fit into your larger financial plan, connect with us at your convenience.


This material is intended for informational/educational purposes only and should not be construed as tax, legal or investment advice, a solicitation, or a recommendation to buy or sell any security or investment product. Investments are subject to risk, including the loss of principal. Some investments are not suitable for all investors, and there is no guarantee that any investing goal will be met. Certain sections of this material may contain forward-looking statements. Forward-looking statements are not guarantees of future performance and involve certain risks and uncertainties, which are difficult to predict. Past performance is no guarantee of future results. Third-party links are provided to you as a courtesy. We make no representation as to the completeness or accuracy of information provided at these websites. Information on such sites, including third-party links contained within, should not be construed as an endorsement or adoption of any kind. Please consult with your financial professional and/or a legal or tax professional regarding your specific situation and before making any investing decisions.

A 529 plan is a college savings plan that allows individuals to save for college on a tax-advantaged basis. Every state offers at least one 529 plan. Before buying a 529 plan, you should inquire about the particular plan and its fees and expenses. You should also consider that certain states offer tax benefits and fee savings to in-state residents. Whether a state tax deduction and/or application fee savings are available depends on your state of residence. For tax advice, consult your tax professional. Non-qualifying distribution earnings are taxable and subject to a 10% tax penalty.





Payton Backonen

Payton Backonen

Marketing & Public Relations Manager

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