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Year End Tax Planning For Those Over 50


year end tax planning

Year end is usually the time for holiday activities, but there are also some year end tax planning and financial items you should pay attention to.  Always consult a qualified tax attorney/advisor or certified financial planner for the best advice.

Here are a few items you should look at, of course, not all may apply to your situation:

1. Retirement accounts. Do you have bonds in your investment portfolio?  Then you might want to hold those bonds inside tax-deferred retirement plans, IRA’s and 401(k) plans. Check with your financial planner on this!

2. Taxable account investments. It might be wise to use tax-efficient mutual funds or separately managed accounts, they work hard to limit the number of taxable events inside your portfolio. Consider buy-and-hold strategies, this could be a suitable option for some investors with these accounts.  Remember a combined federal and state capital gains rates can possibly reach over 30 percent.

3. Rebalance your portfolio. Rebalance your existing investments, with advice and after consulting your financial planner.  Consider using cash flows to rebalance; use dividends and interest earned inside your accounts, new deposits, and proceeds from tax-losses.

4. Realize tax losses. You are allowed to realize annual net investment losses of up to $3,000 or $1,500 if you are married filing separately. This can be used to lower taxable income or offset gains that have been realized. When you sell at a loss, there are rules governing how you can then reinvest those proceeds; so be sure to adhere to the “wash sale rules.”

5. If circumstance permit, make contributions to your IRA or Roth IRA. The maximum contribution amount is the lesser of your taxable compensation for 2017, or $5,500. If you are Over 50 at any time during the year, you can add $1,000.  Better take a look at income limits for your eligibility to contribute; carefully review the guidelines and work with your tax advisor or certified financial planner before making any IRA or Roth IRA contributions.  Check with the IRS for more information, visit

6. Consider a Roth IRA conversion. Traditional IRA can complete a Roth conversion without being subject to income limits.  Roth IRA contributions are made with after-tax dollars, and since gains inside a Roth IRA may not be subject to income tax, qualified distributions can be federal income tax free, however this is provided to if you adhere to IRS guidelines.  Be careful if you need to make any withdrawals from a Roth IRA prior to age 59 1/2.  Always consult your tax advisor or certified financial planner.

Be Prepared for Income Tax Time with Year End Tax Planning

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