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Year-End Tax Considerations

Now that we’re in the fourth
quarter, it’s time to think about what you can do to help minimize your liabilities
for the 2019 tax season and position finances for next year. The following is a
sample of the usual methods. However, if you’d like us to take a more personalized,
comprehensive approach, we’d be happy to review your financial portfolio with
your tax professional and make tailored recommendations for year-end planning.

First of all, don’t forget to take
your annual required minimum distributions (RMDs) from retirement accounts if you’re
over age 70 ½. You’ll need to take them by Dec. 31 to avoid a 50% penalty on required
amounts not taken. If you haven’t yet, consider automating your RMDs so they
are calculated and deposited into your bank account each year without you
having to do anything.1

If you are between ages 59 ½ and
70 ½ and already retired, one way to help reduce your future tax bill on
retirement accounts is to go ahead and start taking distributions. This is especially
advantageous if you’re in a lower tax bracket now than you will be when you begin
combining income from RMDs, Social Security benefits and other sources. Withdrawing
income from those accounts now may enable you to delay starting Social Security
so that benefit can accrue. By reducing your account balances, future RMDs may have
a lower impact on your taxes.2

If you’ve experienced any “paper
losses” in your investment portfolio this year, you may want to speak with your
registered representative and consider selling those securities before year-end
to harvest losses for tax purposes. The IRS allows taxpayers to deduct up to
$3,000 in losses from ordinary income and carry forward any unused loss amounts
to future-year tax returns.3

If you harvest any gains or losses
by year-end, you also may want to rebalance your portfolio to ensure it remains
aligned with your strategic asset allocation to help you achieve long-term
goals.

If you are planning to make
charitable contributions, you may want to “bunch” cash donations that you would
typically make over several years in order to qualify as a tax deduction in
2019. Remember that your donations will need to exceed your (now almost doubled)
standard deduction in order to qualify. Also, consider donating highly appreciated
securities or gifting your RMD as an alternative to cash contributions.4

Content prepared by Kara Stefan
Communications.

1  Raymond
James. Sept. 17, 2019. “Check This List – Twice – Before Year-End.” https://www.raymondjames.com/southsidebank/resources/2019/09/17/Check-This-List-Twice-Before-Year-End. Accessed Oct. 9, 2019.

2  Miriam
Cross. Kiplinger. Oct. 3, 2019. “How to Downsize Your RMDs.” https://www.kiplinger.com/article/retirement/T045-C000-S002-how-to-downsize-your-rmds.html. Accessed Oct. 9, 2019.

3  Russ
Wiles. AZCentral. Sept. 29, 2019. “10 financial tips to follow as the calendar
turns to fall.” https://www.azcentral.com/story/money/business/consumers/2019/09/29/year-end-financial-planning-can-start-fall-here-10-tips/2429954001/. Accessed Oct. 9, 2019.

4  Kristin
McKenna. Forbes. Sept. 25, 2019. “It’s Time For Year-End Financial Planning.” https://www.forbes.com/sites/kristinmckenna/2019/09/25/its-time-for-year-end-financial-planning/#2db47d047783. Accessed Oct. 9, 2019.

This content is designed to provide general
information on the subjects covered. It is not, however, intended to provide
specific tax advice and cannot be used to avoid tax penalties or to promote,
market or recommend any tax plan or arrangement. You are encouraged to consult
your personal tax advisor.

We are an independent firm helping individuals create
retirement strategies using a variety of insurance and investment products to
custom suit their needs and objectives. This material is intended to provide
general information to help you understand basic financial planning strategies
and should not be construed as financial or investment advice. All investments
are subject to risk including the potential loss of principal. No investment
strategy can guarantee a profit or protect against loss in periods of declining
values.

The information contained in this material is believed to be
reliable, but accuracy and completeness cannot be guaranteed; it is not
intended to be used as the sole basis for financial decisions. If you are
unable to access any of the news articles and sources through the links
provided in this text, please contact us to request a copy of the desired
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