Tick, tock, tick, tock.
Do you hear it? That’s the sound of time running out.
But there is still time for a few smart year-end tax moves that can save you money.
Here’s 5 great tax strategies to consider before year-end that can slash your tax bill:
- Max out your deductions by funding workplace retirement plans. The maximum 401(k) contribution this year is $19,500 (or $26,000 if you are 50 or over by the end of 2020). Want to know next year’s 2021 contribution limits? Click here.
- Set up a new retirement plan if you’re your own boss. Some plans need to be established by December 31, so don’t delay.
- Make charitable contributions to score a deduction, especially Qualified Charitable Deductions (QCDs) which go straight from your IRA to charity.
- Convert funds in your traditional retirement accounts to a Roth IRA. It costs you in the short-term but can save you money down the road.
- Harvest capital gains and losses to improve portfolio quality and fine-tune your tax strategy. It’s healthy to take periodic capital gains, especially when tax rates are low, like now. You may want to cut holdings that are not performing as expected, as well as investments that have done too well and need to be trimmed back. Taking capital losses can help cut your overall tax bill.
We are using these strategies to tame taxes for clients from now until year-end. Talk to your tax advisor as soon as possible to discuss your own strategy.
The year is almost over, but there’s still time to strategically minimize your tax liability. Want more year-end tax pointers? Read 10 Tax Tips for 2020 for Individuals and Businesses, and consult with your Mercer Advisors team to help you make the right tax moves.