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Year-End Tax Planning Considerations


  • Delaying or deferring income at year-end can be a smart move for most individual taxpayers and business owners.
  • If over age 70 ½, you can distribute up to $100,000 directly from your IRA to a qualified charity and garner substantial tax savings.
  • Consider managing your HSA account as a long-term, tax-free investment alternative. See my discussion on this option.


There have been some significant changes to individual and corporate taxes in 2018. With the year-end approaching, it’s always smart to consider tax planning opportunities. There may be more ways to save than you think.

For individuals, tax rates have dropped from previous years. Certain itemized deductions have been reduced or eliminated and the standard deduction has been increased. For most taxpayers, these changes will result in a reduced overall tax bill.

No matter which tax bracket you fall in, you generally want to reduce your income or defer it to another year. Here are some strategies to consider:


  1. Delay or defer income to another year if it is possible and prudent. Make sure you consult with your CPA to confirm this is a viable option in your situation.
  2. Distribute up to $100,000 directly from your IRA to a qualified charity. You must be at least age 70 ½ to do so, but this strategy avoids taxation of your income on the distribution. It is the most tax-efficient way to fund charitable assets from your IRA funds.
  • With the change in itemized deductions and the increase in standard deductions, this strategy becomes extremely important for most retirees. If you are over age 70 ½ and contribute to charities, consider this option for your required minimum distributions.


  1. Maximize charitable contributions. Consider gifting your long-term appreciated stock or mutual funds to a charity. You can avoid capital gains taxes on the stock and receive a deduction against your ordinary income based on the fair market value of the stock or mutual fund. Note: Due to the change in itemized deductions and the standard deduction, it may make sense to bunch your charitable contributions into a single year to maximize your deduction. You can also use a Donor Advised Fund to make charitable contributions in a single year or in high-income years, and then distribute the funds from the Donor Advised Fund to your favorite charities over several years.
  2. Sell stocks or mutual funds that are in a loss position. You can offset the loss against other capital gains or capital gain dividends. Any loss in excess of capital gains is deductible against your ordinary income up to $3,000 per year. Finally, any loss more than the $3,000 can be carried forward and used against future capital gains.
  3. Maximize your retirement contributions. The maximum 401(k) deferrals are $18,500 ($24,500 if age 50 or older). If you own a business, consider all retirement plan options since some can provide greater contributions than others.
  4. Maximize Health Savings Account (HSA) contributions. For 2018, the single contribution rate is $3,450 and the family contribution rate is $6,900. Consider managing your HSA account as a long-term, tax-free investment alternative. See my discussion about this option.
  5. If you are self-employed, set up and fund a retirement plan. There are several retirement plan options available to maximize your deductions based on your income and your business structure. In addition, some retirement plans need to be set up prior to the end of the year. Consult with your Soundmark Advisor if this is something you are considering.


The strategies below don’t necessarily result in taxable deductions, but they do provide tax-free or tax-deferred savings options:

  1. Maximize IRA contributions. Even if the contributions aren’t deductible, the growth is tax-deferred.
  2. Consider a “backdoor” Roth IRA. If your income is too high to fund a Roth IRA directly, you may be eligible to contribute via a backdoor Roth IRA by converting your traditional IRA assets to a Roth IRA. Note: This strategy may not work if you have a regular IRA and you should consult with your Soundmark advisor before trying to fund a backdoor Roth account.
  3. Fund a child’s Roth IRA. If you have a child who has earned money, you can help them fund a Roth IRA up to the amount of their earned income (or $5,500 per year), whichever is less. Since most children and teens are in low tax brackets, a Roth IRA is a great way for kids to save money on a tax-free basis and start them on the path to a smart long-term investment plan.

As always, we are here to help. Please contact us immediately if you would like to discuss year-end tax planning strategies.

Todd Flynn, CPA, CFP® is a Principal at Soundmark Wealth Management, LLC. Todd works closely with physicians, business owners, and other high net worth individuals to help them define their financial goals and implement an ongoing financial planning process.

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