The clock is ticking on 2024—are you ready to make the most of your financial opportunities before the year wraps up? It’s normal for holiday shopping and New Year’s plans to dominate your thought process this time of year but taking a few proactive steps with your taxes could save you thousands.
I want to highlight three high-impact tax moves you can still make before December 31. From reducing taxes to setting yourself up for long-term financial success, these strategies are essential tools in your financial playbook. The best part? You can do the right now. Let’s dive in.
Contribute to Tax-Advantaged Accounts
If you’re in a higher tax bracket and want to lower your tax bill right now, tax-advantaged accounts offer a win-win solution for immediate savings and future benefits.
Retirement Accounts
Maximize your 401(k) contributions: If you haven’t hit the annual limit yet ($22,500 for 2024, or $30,000 if you’re over 50), this is an opportunity for you to make additional contributions and reduce your taxable income for THIS YEAR.
Consider Roth IRAs: If your income allows, contribute to a Roth IRA. Unlike Traditional IRAs, Roth contributions will not lower your taxable income this year, but the growth and withdrawals in retirement are tax-free. This will lower your lifetime tax burden.
Health Savings Accounts (HSAs)
- If you’re enrolled in a high-deductible health plan, HSAs allow you to contribute up to $3,850 for individuals or $7,750 for families (plus an extra $1,000 if you’re over 55).
- Contributions are tax-deductible, the growth is tax-free, and withdrawals for qualified medical expenses are also tax-free—a triple tax advantage.
Why This Matters
Tax-advantaged accounts are the building blocks for every smart financial plan. Not only do they help reduce your taxable income now, but they also provide a nest egg for future needs.
Consider Roth Conversions
If you are like me and want to reduce your lifetime tax burden, A Roth conversion might be your answer.
What Is a Roth Conversion?
A Roth conversion involves moving funds from a Traditional IRA or 401(k) into a Roth IRA. While you’ll pay taxes on the converted amount now, the growth and future withdrawals will be completely tax-free.
Why Now?
Potentially lower tax brackets: If you’re in the 24% tax bracket or lower, the next couple of years may be the last time you see those low rates – maybe forever. Converting now could save you money in the long run.
Tax code changes on the horizon: We believe the tax code will have to change and rates will have to go higher to prevent the U.S. from going bankrupt trying to pay back the national debt. You should lock in today’s tax rates before potential legislation increases them.
Reduce future RMDs: By converting funds into a Roth IRA, you minimize the taxable income required by RMDs once you turn 73 – but don’t overdue it or you will create unnecessary taxes.
How to Execute
- Work with your tax professional to calculate how much to convert without pushing yourself into a higher tax bracket.
- Be mindful of Medicare surcharges and other tax implications to avoid surprises.
Why This Matters
A Roth conversion is one of the most powerful tax-planning tools available, giving you greater control over how you are taxed in retirement and ultimately reducing lifetime taxes that need to be paid.
Harvest Tax Losses
Markets and investments are going to fluctuate, it’s a feature of the system- not a bug. When markets fluctuate, turning losses into gains is all about strategy.
Sell Underperforming Investments
Look at your investments, are there stocks or other investments that have declined in value? Selling these assets can offset taxable gains from your winners.
Use the Capital Gains Offset
Losses can offset capital gains dollar-for-dollar. If your losses exceed your gains, you can deduct up to $3,000 of ordinary income per year, with any remaining losses carried forward to future years.
Why This Matters
Tax-loss harvesting not only saves you money but allows you to rebalance your portfolio for better long-term performance. By shedding underperforming assets, you can strategically align your investments with your goals.
Bonus: Leverage Charitable Giving
If you’re looking for ways to give back and reduce your tax burden, charitable giving offers a dual benefit.
Donate Appreciated Assets
Donating stocks or other appreciated assets lets you avoid capital gains taxes while claiming a deduction for the full market value of the asset.
Qualified Charitable Distributions (QCDs)
If you’re 70½ or older, use your IRA to make tax-free donations directly to a qualified charity. This satisfies your RMD and reduces taxable income.
Bundling Donations
Combine multiple years’ worth of charitable contributions into one year to surpass the standard deduction and maximize tax benefits.
Why This Matters
Charitable giving is about more than philanthropy—it’s a strategic tool to lower your tax bill while making a meaningful impact.
The year’s end is a critical time to evaluate your financial plan. By contributing to tax-advantaged accounts, leveraging Roth conversions, and harvesting tax losses, you can significantly lower your lifetime tax burden and position yourself for the long-term success you always wanted. And don’t forget—charitable giving can add another layer of impact to your strategy.
Don’t wait! Time is running out to make these moves before December 31. Schedule a meeting with one of our financial advisors today to take full advantage of these opportunities.
A little proactive planning now can lead to substantial savings tomorrow.
If you would like to discuss your current situation schedule a free 20-minute call with the link below.
 | About the Author James M. Comblo, CFF is the President & CEO of FSC Wealth Advisors. His greatest passion in the financial services industry is helping clients live the life they want, not the life they are forced to. To learn more about him clickhere. |