2023 Year-End Tax Strategies

It is already December, but it is not too late to use these year-end tax strategy ideas to reduce your 2023 federal income tax liability.

• Review tax withholding and estimated payments – you don’t want to be exposed to fines for failing to withhold/pay the appropriate amount of income tax.
• Review and understand the allowable deductions and credits – which may decrease your ultimate income tax liability.
• Make those last-minute charitable gifts – remember to keep records of gifts.
• Maximize contributions to their employer-sponsored qualified plan – check with your plan administrator for the deadline so you can make adjustments to your contributions.
• Maximize your deductible on traditional IRA contributions (deadline for making 2023 contributions is April 15, 2024).
• If you expect to earn more in future years than in 2023, consider converting all or a portion of your traditional IRA to a Roth IRA before year-end.
• For traditional IRA holders who were required to take a minimum distribution in 2022 (those who reached age 72 in 2022 and older), ensure you don’t forget to take your 2023 RMD before December 31st. Alternatively, consider a qualified charitable distribution (up to $100,000) to reduce income tax liability. Don't forget your receipt from the charitable organization! If you reach age 72 in 2023, you do not have to take your first RMD until April 1, 2025. See SECURE 2.0 Act of 2022 and IRS Notice 2023-23.
• Note that inherited IRA beneficiaries have no RMD for 2023. See IRS Notice 2023-54, which extends the relief provided in IRS Notice 2022-53.

For questions, please reach out to any member of the Advanced Markets Department.

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