The end of 2023 is rapidly approaching, and we know everyone has about a million things to keep track of and check off their ‘to-do’ lists. We have compiled the following list of year-end tax items that are easy to overlook during the craziness of December, but important to start thinking about before the new year. Hopefully this will serve as a reminder, and possibly a checklist, to make your life easier and optimize tax outcomes.

• Have you discussed any major changes with your accountant?  Examples include:
  • Changes in marital status
  • The birth of a child
  • Conversion of personal real estate to rental
  • Changes in income or windfalls, including:
    • Alimony
    • Gambling winnings
    • Cancellation of debt
    • Equity compensation
    • Sales of real estate
• Have you considered the following items that would need to be funded by December 31st?
  • Employer-sponsored retirement account [401(k), 403(b), or 457(b)] contributions
  • 529 Plan contributions
    • For gift tax purposes you can opt to treat a gifted contribution to these plans as if made over a five-year period.
  • Charitable contributions (make sure you receive and retain acknowledgments)
    • Have you considered taking advantage of the option to make gifts via a qualified charitable distribution (QCD) if you have a qualifying IRA?
  • Keep in mind the potential to contribute to an IRA or HSA by April 15th if you qualify.
• Have you taken your required minimum distributions (RMDs) from any applicable accounts?
  • Generally, if you turned 73 in 2023 you have until April 1st to take your first RMD.
  • Otherwise, RMDs must be taken by December 31st to avoid penalties.
  • Consider utilizing a qualified charitable distribution (QCD) to optimize the tax impacts of RMDs from IRAs.
• Did you start repaying student loan interest this year?
• Have you considered if you might qualify for any additional credits?
  • Did you incur childcare costs?
  • Did you make any energy efficient home improvements?  Credits available for qualifying improvements have been significantly expanded for 2023.  Make sure you provide your accountant with a full description of the improvements and related invoices to determine eligibility.
  • Did you purchase a hybrid/electric vehicle?
• Have you checked to ensure that your withholdings, or quarterly estimated taxes, are up-to-date and adequate?

This list focuses on year-end considerations for federal tax planning; however, it is important to consider applicable state and foreign taxes as well.

With the complexity and individual nature of taxes, it is impossible to create a one size-fits-all approach to year-end planning.  It is important to consult with your trusted advisor if you have questions on any of the above or want to discuss your individual planning further.

The information reflected in this article was current at the time of publication.  This information will not be modified or updated for any subsequent tax law changes, if any.