6 Tips For Your Year-End Tax Strategy

Taxes can be one of the least entertaining subjects. Right up there with inflation and capital structures, taxes are often are not talked about at a round table with family and friends. Even though they can be tedious, the tax deadline is almost upon us. It is a good idea to evaluate your tax strategy for the new year under the new tax laws.  

Let’s take a closer look and see how you can best stay on good terms with the IRS without breaking the bank.

Retirement Accounts

Contributing to your retirement plan is a great way to save money on your taxes for the following year. Not only is it a wise investment for your future, but with deductions it could lower your tax bracket therefore letting you pay less in income taxes. With the end of the year approaching, looking at contributing the maximum amount of money that you can is wise.

The IRS will allow for an $19,000 maximum ($25,000 if over 50) to your 401(k) in 2019. If you cannot afford to put that much money into the account, be sure that you are contributing the percentage that your employer will match. This way you are still growing the account at a more accelerated rate.

Possible retirement accounts to evaluate:

  • 401(k)
  • IRA
  • Roth IRA
  • Keogh

It is important to note that if you contribute to an IRA account and either you or your spouse contribute to an employer retirement plan (e.g. 401(k) or 401(b) ), your deduction will be limited.

Workplace Spending Accounts

Often employers offer either a Health Savings Account (HSA) or a Flexible Spending Account (FSA). Some companies even offer both options to their employees. You have put money into these accounts to save for health-related spending. The money is contributed tax-free, grows tax-free, and when used for medical expenses is withdrawn tax-free. Be sure to take a close look at the fine print.

Often FSAs have a caveat saying that the money is unable to roll over into the next year. This use it or lose it policy is crucial to keep an eye on. Take a last minute trip to the dentist or get your optometrist on the phone so that you are able to use the money that you have saved without forfeiting it. Some employers will have a grace period for FSA spending, but it is important to check with your employer to see how that works at your company.

The Giving Tree

Charitable donations are a wonderful gift at the end of the year. However, they are only tax deductible if you itemize your deductions. If you are planning to donate, you should consider doing it in a tax-friendly way. The new tax code has provided high monetary thresholds on individual deductions for charitable gifts. With this being the case you might consider gifting a stock, bond, or mutual fund. This way, you are not responsible for paying taxes on the profits of the investment and the charity in turn, would get more money.

It is important to note that the gifting of stocks or mutual funds only adds tax value if the asset has appreciated. If it has taken a loss, you would be better off selling the asset, claiming a loss on your taxes, and gifting the cash to the charity.


The end of the year is a great time to check in on your investment portfolio. How is it doing? Are there stocks that are failing? If so, now is a great time to sell of those assets that are not doing well and take the claim of a loss on your taxes. You can use the losses to offset any gains you have had throughout the year as well. A loss offsets a gain dollar for dollar. If you have more capital losses than gains, you can use up to $3,000 a year to offset ordinary income and carry over the rest to future years.

It is also important for you to look at the investments that have appreciated. Many investors have their mutual funds set up to automatically reinvest in extra shares. This action increases your tax basis in the fund itself. Including these reinvested dividends will save you from paying double taxes on your investments.


Another thing you can do to help cushion your tax bill in 2018 is to defer your income to January 2019. You may not be able to defer your base salary, but you may be able to wait to receive any year-end bonuses or extra money until the new year. Doing this can have a positive effect on your tax bracket and can lower your income taxes.

Do note that by deferring a bonus you are not inadvertently affecting your 2019 tax bracket. Only defer if you are confident that you will remain in the same (or lower) tax bracket for the next year.

Talk With A Professional

Taxes are difficult. There are many laws, mandates, and loopholes that exist in the tax system. If you want to know how to best prepare for your taxes at the end of the year, consider talking with a CFP® Professional. I offer tax consulting and would be happy to help you maximize your tax strategy this year.