As the year winds down, it’s a great time to focus on strategies that can help you minimize your tax burden. Here are three effective tactics you can implement before December 31:

1. Maximize Retirement Contributions

One of the simplest ways to reduce your taxable income is to contribute to tax-advantaged retirement accounts. For 2024, the IRS allows individuals under 50 to contribute up to $23,000 to a 401(k) and up to $7,000 to a traditional IRA. Those 50 or older can contribute an additional $1,000, respectively. Contributions to these accounts are tax-deductible, meaning they lower your taxable income while boosting your retirement savings.

2. Make Charitable Donations

Charitable giving is not only a generous act but also an effective tax-reduction strategy. Donations made to qualified charities by year-end can be deducted from your taxable income if you itemize deductions. Beyond cash donations, consider donating appreciated assets like stocks, which allows you to avoid capital gains taxes while still claiming a deduction for the asset’s full market value. Be sure to keep proper documentation of your contributions to satisfy IRS requirements.

3. Harvest Tax Losses

If you have investments that have lost value, consider selling them to offset any capital gains you’ve realized this year. This strategy, known as tax-loss harvesting, can also offset up to $3,000 of ordinary income annually. Any unused losses can be carried forward to future years. Pair this strategy with rebalancing your portfolio to align with long-term financial goals.

Implementing these strategies before the year ends can lead to significant savings come tax season. Need help? Call us at (720) 949-7733 to help tailor these strategies to your specific financial situation and ensure compliance with IRS regulations.