Written by Mark Sipos, LFG Tax Services Director

From maximizing tax-advantaged savings accounts to donating to charity, here are strategic tax moves to consider before year-end.
 

Tax Day may still be months away, but there are plenty of tax-planning strategies you can consider before then to help manage your 2024 tax bill. In fact, certain tasks should not—or in some cases cannot—wait until next year, lest you miss out on potentially important tax-saving opportunities.
 

Here are the top strategies to consider before December 31—and those you can ponder until Tax Day.
 

Tax-planning strategies to consider by year-end

Be sure to take all your required minimum distributions (RMDs). Generally, taxpayers age 73 or older must take minimum distributions from your tax-deferred retirement accounts by the end of the year. Individuals who reached RMD age in 2024 have until April 1 to take their first distribution.
 

Maximize contributions to your workplace retirement plan

First and foremost, if your employer matches contributions, be sure to contribute enough to your tax-deferred workplace retirement plan to get the full amount. consider contributing the maximum allowed—$23,000 ($30,500 if age 50 or older) in 2024 for 401(k)s and similar plans if you have the means. Not only can this help reduce your taxable income for the current year and boost your overall savings, but doing so can also be a great tax-planning strategy if you think your tax rate will be lower in retirement than it is today.
 

See if converting a traditional IRA to a Roth makes sense

If your income exceeds Roth IRA contribution limits, you can convert the pretax savings in a traditional IRA to a Roth in order to reap those tax-free withdrawals in retirement. The converted funds will be treated as income, so generally, you'll want to convert just enough to remain within a specific tax bracket to avoid a hefty tax bill.
 

Consider after-tax contributions to an employer plan, along with a Roth rollover

This tax-planning strategy potentially allows high-income earners to save even more in a Roth account by sidestepping the income limits of a Roth IRA and the tax consequences of a regular Roth conversion

If your employer-sponsored retirement plan doesn't allow you to fund your account with after-tax dollars or take distributions while still employed, you could consider a backdoor Roth.
 

Optimize your charitable contributions

If charitable giving is part of your financial plan and you itemize your deductions, act by year's end to ensure your donations are as tax-efficient as possible:

• Charitable donations: In general, you can deduct cash donations to qualified charities worth up to 60% of your adjusted gross income (AGI), which is your total gross income minus certain deductions. Donating appreciated long-term investments can be especially tax-efficient because you don't have to recognize the capital gains and you can receive a tax deduction for the full fair-market value of the donation (up to 30% of your AGI).

• Qualified charitable distribution (QCD): If you're 70½ or older, you can donate up to $105,000 to a charity directly from your IRA using a QCD for tax year 2024. You won't be taxed on the distribution or receive a tax deduction for the donation, but you can use your gift to satisfy all or part of your RMD without adding to your taxable income.

• Reduce or eliminate capital gains with tax-loss harvesting

The end of the year is a great time to make sure your portfolio is still aligned with your goals. When rebalancing, you may be able to reduce your tax liability by offsetting any realized capital gains with your losses. If you have more capital losses than gains, not only can you potentially offset up to $3,000 of ordinary income on your 2024 tax return, but you can also carry over any excess amounts to future tax years.
 

Tax-planning strategies to consider by Tax Day

Maximize all other tax-deferred savings accounts

You can potentially help reduce your taxable income by funding your tax-advantaged accounts, and you have until Tax Day to make contributions for the 2024 tax year. Maximum contribution limits for 2024 are:

• Health savings accounts (HSAs), if available to you: $4,150 for individuals ($5,150 if age 55 or older) and $8,300 for families ($9,300 if age 55 or older). 

• Traditional IRAs: $7,000, plus an additional catch-up contribution of $1,000 for individuals ages 50 or older.

• Contribute to a Roth IRA

Contributing after-tax dollars to a Roth IRA won't help reduce your taxable income when you make them. However, once you reach age 59½, all contributions and earnings can be withdrawn tax-free, so long as you've held the account for five years, and Roth IRAs aren't subject to RMDs—potentially lowering your taxable income during retirement.