Top End-of-Year Financial Moves for 2023

💥 The end of the year is still an excellent time to get ahead and manage your personal finances. 💥

👉 Here are some things you might want to consider before closing out 2023 presented by Jim Zahansky, AWMA®. 

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Transcript

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Welcome to You and Your Money. Empowering you to reach your goals with tips to help you Plan Well, Invest Well and Live Well. I'm Jim Zahansky, principal, managing partner and chief goal strategist at Weiss, Hale and Zahansky Strategic Wealth Advisors. Now on to today's topic. 2023, It's been a year of changes and adjustments. That's an understatement. How important is it for individuals to review their finances and makes strategic moves before the year ends? Yeah, it's always a good time. I mean, we were talking off air. It's hard to believe it, you know, here mid-November, almost Thanksgiving. So you have to get in the frame of mind that how am I going to close the year in a lot of ways before as you start to think about, you know, holiday gifts and Thanksgiving and all the money you're going to spend on those things, you know, considering the moves you need to make to set yourself up for a really solid tax season this year and a start to 2024. And these are the things, the people that do this sort of thing and be strategic about how they're moving their money towards the end of the year, in the beginning next year tend to be better savers long term and have more wealth. What is tax loss harvesting? Well, we go out this time of year, the cornfields are high and now we cut them down. So that sounds it sounds official. Yeah, but, but in essence, it's a time of... when we look at any appreciated stock and and sort of offset any gains that might be had with some holdings that might be of a loss. And then we try to for clients you know give them tax losses in holdings that might be, you know, not performing as well. And then you can carry forward those losses annually, you know, up to $3,000, which essentially is as a deduction right from the top line of your of your filing. So it's a strategic. Trading move on our end, which we do on all portfolios this time of year for clients and look at what's performed, offset it with losses and try to give some tax loss harvesting which we find is a really strategic move in portfolio management. Speaking of deductions, itemized deductions or standard deductions. Yeah, Well, I mean, the standard deduction has increased really nicely since the tax cut and Jobs Act of 2017. And so, you know, if you're a married couple filing jointly, the standard deduction for 2023 is 27,700. So it's a really high number. Right. But if you can if you're a person who donates a lot of money or has, you know, a lot of mortgage interest and your your standard deduction, if you start to itemize your itemized deductions, beats that standard deduction. So, again, if you're married, filing jointly, 27 seven, then you obviously you're taking the itemized deductions, Right. If it's higher and some people do that right, some people are giving away, you know, money to charities and some people are having high amounts of deductible interest. And so, you know, work with a tax profession to figure out what's right for you. But the standard deduction is certainly quite high and going to increase for the 2024 tax season as well. Yeah, and charitable deductions, as you just mentioned, that's this time of the year. It's what we're doing. Yeah. And I mean, clearly it's something a lot of I know we engage a lot of planning with our clients on charitable deductions particularly you know if you're in a required minimum distribution situation from your your IRAs and you're charitably inclined and you know, you want to look at 501c3 organizations specifically. Yeah. You know, and obviously we have a number of local ones that are important to us like IHSP, TEEG, you know, the YMCA here in Putnam, QVCC Foundation are all really, I know client favorites, but in all 501c3 organizations that can be tax deductible if you're itemizing. Okay retirement contributions, you want to do a look see on that and maybe throw a little more money in, right? Clearly, yeah I think retirement contributions to you know either your 401k your 403b or 457 plan or your or your IRA if it's a tax deductible one all give you, you know, the ability to reduce taxable income and increase your savings, which builds wealth in the long term. So you know, at a very simple level, your you're a below the age of 50, you've got a 401k your ability to to contribute is up to the maximum amount by the IRS for this year is 22,500 if you're below 50. And then if you're over 50, there's a $7500 contribution. That's a catch up provision. So you can almost, you know, look at that at this point a year, did I contribute to the limits? And if I didn't and I have more cash, don't put it in, do it. Roth conversions. What's that? Yeah. Roth IRAs are really wonderful. You know tool they're generally you're contributing to them post-tax and they grow tax deferred but unlike a traditional 401k or IRA, you don't have to take required minimum distributions at the age the IRS tells you which is usually you know 73 and higher. So, you know, with clients we're looking at over time what's the most tax efficient way to have your IRAs. And we look at Roth conversions, meaning we might convert some dollars from what you had in a traditional IRA or 401k and convert them to a Roth, which is sort of a more tax friendly vehicle, especially as you age. And we would do that in conjunction with a tax professional to make sure that it had long term tax savings for you. All right. Key advice as we approach the new year. Well, we've been talking about a couple of themes here. The key, key advice is look at the health of your finances overall. What what is your budget look like? Do I have extra cash flow going into the holiday season or not? If I do, how do I improve tax efficiency? You can contribute to your retirement plans. You could, you know, contribute to your health savings account if you have one. All really good tax moves. And then in addition to that, you know, you really want to be mindful of working with whoever your advisor is and get some tax loss harvesting in in your portfolio to make sure you can, you know, potentially get some tax savings as you go forward into your filings for this year. All right. Always good advice, Jim. So remember, going understanding your financial options and making informed choices are a key to a prosperous financial future. If you're seeking assistance and planning your financial future, you can request a complimentary consultation, true story, at Weiss, Hale and Zahansky, check out their website to make that request, whzwealth.com. You can call them too at 860-928-2341. Good job here today, Jim. Thanks, Gary. All right. That brings us to the end of this episode. Thanks for listening to You and Your Money. Find even more episodes, videos and other resources at our website whzwealth.com. Be sure to come back next week for more tips to help you live fearlessly and pursue your financial and life goals. Until then, live well. Weiss, Hale and Zahansky Strategic Wealth Advisors offer securities and advisory services through Commonwealth Financial Network member FINRA/SIPC, a registered investment advisor. Fixed insurance products and services offered through CES Insurance Agency. They practice at 697 Pomfret Street, Pomfret Center, Connecticut 06259 and can be reached at 860-928-2341. Weiss, Hale and Zahansky Strategic Wealth Advisors do not provide legal or tax advice. The tenured financial services teams strive to support clients in achieving their financial life goals. For more information regarding wealth management and customized financial planning with Weiss, Hale and Zahansky Strategic Wealth Advisors, please visit www.whzwealth.com.