Year-End Tax Checklist
Year-End Tax Checklist
It’s hard to believe we are getting close to wrapping up 2024! The end of the year is the time to be with loved ones, reflect on this year, and look forward to next year. We would much rather you focus on that than worry about year-end tax deadlines!
To simplify your year-end tax planning efforts and minimize your tax liability, we recommend a quick review of your Required Minimum Distributions, charitable contributions (including Qualified Charitable Distributions), 529 Plan contributions, and other tax-advantaged retirement contributions.
Required Minimum Distributions
To avoid paying a steep penalty of 25%, doublecheck that you have taken your Required Minimum Distribution, if applicable. These distributions must be taken by December 31st. All retirement accounts that are held at Charles Schwab
under the management of Hurlow Wealth Management Group are monitored, but if you have outside accounts that are not managed by Hurlow Wealth Management Group, be sure your RMD is taken before the end of the year.
Charitable Contributions
To receive a charitable contribution itemized deduction, donations must be received by December 31st. Charles Schwab recommends allowing 2-6 weeks for the charitable transfer of securities. We have eclipsed the early side of that window, so if you are thinking about donating appreciated stocks or mutual funds to a charity or a Donor Advised Fund, give us a call right away. We will work with Charles Schwab and give it our best effort to make sure your gift is received before the end of the year.
Qualified Charitable Contributions
Speaking of charitable gifts, if you are over Age 70-½, you are eligible to make Qualified Charitable Distributions (QCD) from your IRA. This is particularly beneficial for those who are required to take money out of their IRA’s each year through a Required Minimum Distribution. Instead of taking money from your IRA – and paying the required tax on it – you can transfer the money directly from the IRA to the charity of your choice and qualify for a tax-free transaction. Just let us know if you’d like to make a QCD, and we will help you get it done. Again, gifts must be received by the charity by December 31st. Be sure to inform your CPA that you made a QCD for proper tax reporting!
529 Contributions
For Indiana taxpayers who contribute to a 529 college savings plan or would like to do so, the contributions must be received by Indiana529 (formerly CollegeChoice) by the tax filing deadline (extended from December 31st). Indiana taxpayers are able to receive a 20% state tax credit (up to $1,500) on these contributions. Other states may also offer tax benefits for contributing to a 529 Plan as well.
Roth IRA Conversions
If you are interested in completing a Roth IRA conversion for the current tax year in order to reap tax-free withdrawals in retirement, the conversion must occur before December 31st. If you think you might benefit from a Roth IRA conversion or would like to explore the topic in more detail, please speak with one of your advisors.
Maximize Contributions to Your Employer-Sponsored Retirement Plan
Contributing the maximum amount to your tax-advantaged employer-sponsored retirement plan can help reduce your taxable income for the current year. In 2024, the maximum contribution for 401(k)s and similar plans is $23,000 ($30,500 if age 50 or older).
Maximize All Other Tax-Deferred Savings Accounts
Money set aside in Traditional IRA’s and Health Savings Accounts can potentially help reduce taxable income. Although you have until Tax Day to make these contributions for the prior tax year, we encourage maxing out contributions to these accounts by the end of the year through payroll deductions. For 2024, the maximum contributions are:
- Health Savings Accounts: $4,150 for individuals ($5,150 if 55 or older) and $8,300 for families ($9,300 if 55 or older). HSAs provide many tax benefits, including tax-free earnings and withdrawals (when used for qualified medical expenses), and if you itemize, you can deduct after-tax contributions.
- Traditional IRA’s: Up to $7,000 ($8,000 if you're 50 or older). However, if you or your spouse are covered by an employer retirement plan, contributions to a Traditional IRA may not be fully tax-deductible and deductions may be phased out.
Meet with Your Financial Advisor
If you have questions or need help with your specific situation, schedule time to visit with your financial advisor. If you are not working with an advisor, consider scheduling an introductory call with one of the advisors at Hurlow Wealth Management Group. For over two decades, the fiduciary financial advisors at Hurlow Wealth Management Group have helped clients find clarity, feel confident, and achieve comfort in retirement.