Tags: taxes | donations | deduction | retirement | savings

Year-End Wealth Management Checklist for 2023

Year-End Wealth Management Checklist for 2023

George Mentz By Thursday, 30 November 2023 03:21 PM EST Current | Bio | Archive

As we approach the end of the year, it's essential to review your tax planning strategies. Here's a concise checklist of actions you can take before year-end:

1. Gifts: Utilize the annual exclusion gifts: Consider making year-end annual exclusion gifts of $17,000 per individual or $34,000 for married couples. [i] [ii]

2. Maximize IRA contributions: Make sure to maximize your year-end contributions to your Individual Retirement Accounts (IRAs). The IRS has an expansive list of requirements and limits. If you have a financial advisor, ask to speak to their retirement specialist department before making any serious decision. [iii] The general goal is to maximize your contributions to retirement accounts such as 401(k)s, 403(b)s, TSP, or IRAs to reduce your taxable income and save for retirement.

3. Establish or Fund 529 Plan accounts : Create 529 Plan accounts for your children and grandchildren before the year-end. You may also explore the option of front-loading these accounts with five years' worth of annual exclusion gifts, taking into account any other gifts made during the year to these beneficiaries. [iv] Remember that some states require you to use their PREFERRED 529 provider to capture the state income tax deduction if it so exists.

4. Tuition or Medical Gifting : Direct payment of tuition and medical expenses: If applicable, consider paying tuition and non-reimbursable medical expenses directly to educational institutions or medical providers. [v] If there are children or young adults that you seek to help and inspire, you can help them “tax free” with direct donations to their educational skills and certification providers. It could be a certification course in project management such as the MPM Master Project Manager ® program, or a financial course and certification such as the Chartered Financial Manager ® and the education and qualification would be a tax free gift if paid directly to the provider.

5. Explore charitable giving: Think about making charitable gifts before the end of the year, including exploring the option of charitable IRA rollovers, which can allow you to contribute up to $100,000 to eligible charitable organizations while potentially offering tax benefits on your 2023 income tax return. [vi]

6. Prepay Expenses: If you want to lower your tax burden for 2023, you can pre-pay your expenses before the New Year to lower your taxable income. Many companies that you already do business with will email your invoice before year end for your review.

7. Estate Tax: You can give during life or at death over $12 million this year. Some people are giving away cash, assets, shares, or stock to children and grandchildren now as the estate tax limit is coming down at the end of next year. Family Planning: Additionally, the lifetime estate tax exemption will be $13.6 million, an increase from the previous $12.9 million.

8. Estate Planning Alert: Wealthy taxpayers are advised to take advantage of these higher limits, as the Trump-era tax cut that doubled the federal estate tax exemption is set to expire in 2025, effectively halving the exemptions. NOTE: Beginning January 1, 2011, estates of decedents survived by a spouse may elect to pass any of the decedent's unused exemption to the surviving spouse. This election is made on a timely filed estate tax return for the decedent with a surviving spouse.

9. Capitalize on capital losses: Offset any capital gains by selling investments that have incurred losses, effectively reducing your overall tax obligation.

10. Harness available tax credits: Make the most of tax credits that are accessible to you, such as the child tax credit or education credits, to lower your tax liability.

11. Income deferral: When feasible, delay the receipt of income until the following tax year to postpone the associated tax obligations.

12. Health Savings Accounts (HSAs): If you possess a high-deductible health plan, contribute to an HSA, as contributions are tax-deductible, and withdrawals for qualified medical expenses remain tax-free.

13. Energy-efficient home enhancements: Take advantage of tax credits for specific energy-efficient home improvements, such as solar panels or energy-efficient windows.

14. Small business tax deductions: Small business proprietors should explore the available deductions, including those for business equipment purchases or qualified business expenses before the year end. You may still be able to get the HUGE 6,000 pound vehicle bonus depreciation or deduction. [vii] [viii]

15. Catch Up Contributions to Retirement Accounts: Mentz advises individuals with higher incomes to consider making pretax catch-up contributions in 2023 while the opportunity is available, as it offers a more substantial tax advantage. To illustrate, suppose an employee contributes $6,000 as a catch-up contribution while in the 35% tax bracket. If they later withdraw this $6,000 during retirement when in the 15% tax bracket, they would have effectively saved $1,200 in taxes, according to his explanation.

16. Bonus Idea: May sure your children have enough money to contribute to their retirement account as your child may receive a tax refund based on your helping fund their self-directed qualified retirement account. If your child has a qualifying income, and funds a retirement account, the government generally lowers the taxpayers tax burden. This is known as the “Mentz Funding Strategy”.

Taking these steps can help you effectively manage your finances and estate as you prepare for the upcoming year.

** Please consult with a Licensed Professional before making any important financial, tax, estate planning, retirement, or any major financial planning or wealth management decision. It may be important to also consult with a CWM Chartered Wealth Manager ® or a MFP Master Financial Planner or Certified Accredited Financial Analyst ®
Commissioner George Mentz JD MBA CILS CWM® is an international lawyer, speaker, educator, tax-economist, and CEO of the GAFM Global Academy of Finance & Management ®. The GAFM is a ESQ accredited graduate body that trains and certifies professionals in 150+ nations under CHEA ACBSP and ISO 21001 standards. Mentz is also an award winning author and graduate law professor of wealth management for a top U.S. law school.

[i] What's New - Estate and Gift Tax | Internal Revenue Service (irs.gov)

[ii] Gift Tax: How It Works, Who Pays and Rates - NerdWallet

[iii] Retirement Topics - Contributions | Internal Revenue Service (irs.gov)

[iv] IRS 529 Plan Rules fs-09-12.pdf (irs.gov)

[v] Frequently Asked Questions on Gift Taxes | Internal Revenue Service (irs.gov)

[vi] Qualified charitable distributions allow eligible IRA owners up to $100,000 in tax-free gifts to charity | Internal Revenue Service (irs.gov)

[vii] List of Vehicles Over 6000 lb that Qualify for the 2023 IRS Section 179 Tax Benefit Deduction | Taxfyle

[viii] Business Use of Vehicles - TurboTax Tax Tips & Videos (intuit.com)

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As we approach the end of the year, it's essential to review your tax planning strategies. Here's a concise checklist of actions you can take before year-end.
taxes, donations, deduction, retirement, savings
Thursday, 30 November 2023 03:21 PM
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