It's the end of the year, and while a few things affecting your tax balance can be done before April 15, there are many that cannot:
- Check your non-qualified brokerage accounts. If you have taxable gains to report, do you have depreciated stocks you can sell to offset those gains? Talk to your broker about tax loss harvesting.
- Have you made your final estimated tax payment? It's not due until January 15, but this is one that sneaks up one us - you can make it in advance and cross it off the list!
- Do you want to convert some IRA funds to a Roth? This makes sense for those who are concerned about tax rates being higher in the future. If you have minimal taxable income (say, you're in the 0% or 10% tax brackets), you might want to move some of your IRA into a Roth to avoid or limit taxes on some of it, and make those funds fully available. Not sure? Contact us for a quick review.
- Are you eligible for a Qualified Charitable Distribution from your IRA? If so, make those contributions now and be sure to get a contemporaneous qualified receipt from the charity (getting it later if you're audited will NOT make the contribution deductible).
- Want to take home energy-saving deductions? Because there are annual limits, you might want to schedule some work for December and some for January to get the most benefit from your projects, such as windows and doors.
- Arizona tax credit contributions can be made now or before April 15 to take full benefit of transferring your state tax liability to your favorite charities.
Get ready for January
You are going to start receiving W2 forms, 1099 forms, K-1's and other documents you'll need for your tax preparation. Set aside a large envelope, and put everything in there as it arrives. If it says 1099 or "Important tax information" on the envelope, you'll need it!
If you receive items in digital form, save them and drop them in a Taxes 2023 folder on your computer. You don't need to print them out, since you can upload them directly at tax time, but it is never a bad idea to have a printed version of all your tax documents in one place so you can file it away for the unlikely event that the IRS questions anything.
If you are FULLY digital, and want to store everything electronically, remember to scan in anything you receive on paper, and store your files in a secure cloud environment that isn't dependent on your computer hard drive.
Any documents you provide to us, along with your tax returns, will be stored in your portal file for easy access at any time. Some clients like to print their tax return to store with their backup as well, and of course if you change tax providers you'll want to make sure to copy your documents from the portal.
