6 Smart Tax Moves to Make Before Year-End !Tax planning software tips

Basically, you can save money by saving money. This review of the strategy says that if you save money, you can save money by working hard.

The scheme you choose, like a portfolio, will yield tax loss harvests. If you don’t save money, you can choose the Roth option as a last-minute self-employed retirement plan contribution. You’ll be surprised.

Surprise? You can’t deduct depreciated stocks, and you can’t take college tax credit. You can take a Roth contribution as a self-employed person, but you can take a 20% pass-through deduction on your pretax retirement contribution. You can take a Roth conversion as a dividend tax-free. The tax situation is changing, and foreign tax credit is having a negative impact.

The tax system is full of surprises, complicated rules, and a flat tax. Congress is pushing for benefits, phase-outs, credits, surtaxes, and special rewards, while the political party has been pushing for a platform that says: “The tax code is complicated, so it’s not worth the votes.”

Well, here’s what you need to know. Here’s how: Get software. You’ll need to file your taxes in February, and you’ll need to file your taxes in the first place. The first thing you need to do is get regular updates, which are free.

If you’re a tax professional, you can get advice on how to do tax strategy. If you’re a tax professional, you can get software, which is free.

If you’re a $100 TurboTax user, you can get H&R Block’s desktop tax software, usually the “business” edition. If you’re self-employed, you can get the basic version.

You can create a test file, which is free. Use the test file to practice.

Start a dummy return, correct age and marital status. If your personal situation changes, you will need to estimate your income and deductions for your 2023 tax return, which will include inflation and a percentage of your possible tax liability, so you can estimate your tax liability. Do not save your tax liability as “Dummy 1”.

This is a precision project, so you will need to pass the correct bracket. Tarpor software will calculate federal and state taxes for you.
“Let’s say you copy the test return ‘Dummy 2’ name and save it, then add an incremental transaction. If you sell a loser stock and lose capital, convert $20,000 from an IRA to a Roth IRA, and then make a charitable contribution.

Look at your tax totals (state or federal combined). The numbers are approximate. The difference between Dummy 1 and Dummy 2 is small, but accurate.

Normally, your immediate tax bill minimizes your tax bill. You can accelerate deductions or postpone income. You always think about it, says Lisa Greene-Lewis, TurboTax’s CPA. The Roth conversion process can accelerate income, and is a prominent example. Here are some examples.

In the meantime, you’ll see that you’ve lost $9,000 in unrealized losses. A stock is worth $5,000. If the stock price is up $5,000, the company will complete the merger in January. If you don’t have a significant gain, you will lose money.

If you lose $5,000, you will lose the combined gain, which will be a long-term gain of 15% rate. The remaining $4,000 will be taxed as high-rate ordinary income: $3,000 in 2024 (with an annual maximum) and $1,000 in 2025. Here’s the strategy: If the stock price is up, you will sell it, and you will pay a 15% tax rate. If you lose $9,000 in January, you will lose $9,000 in high-tax ordinary income against tax, three years from now.

Tax strategy is a given, future circumstances or tax law changes are guesswork to short. The uncertainty is the way to go, the high probability of payoff is high.

Recently, we heard that the Tax Cuts and Jobs Act of 2017 expires in 2025, and income postponement is unwise. The election is also a time of change. Bill Smith, a Washington D.C.-based tax lawyer with CBIZ business advisory firm, said: ‘It is almost certain that TCJA provisions will be extended.’

Generally, tax bills minimize deductions, accelerate deductions or delay income. This is always the case, says Lisa Greene-Lewis, a TurboTax CPA. Roth conversions are a prominent example of how income can be accelerated. There are many reasons for this.”
Consider the following situation: You have a $9,000 loss on your stock. You have a $5,000 profit on your stock, and the company is expected to complete the merger in January. You will not see any significant gain or loss.

If you have a $5,000 loss, you can combine the two companies to make a $5,000 profit, which is a 15% long-term gain. The remaining $4,000 is taxed as higher-rate ordinary income: $3,000 in 2024 (for the purpose of the annual maximum) and $1,000 in 2025. Here is your strategy: Sell the winning stock, and pay a 15% tax rate. The January loss is $9,000 of high-taxed ordinary income against 3 percent of income.

Tax strategy is a lot of guesswork, especially when it comes to future circumstances and tax law changes. Uncertainty is an excuse, and there’s a high probability that it will move.

The 2017 Tax Cuts and Jobs Act is due to expire in 2025, so postponing income is risky. The election is also a chance for change. Bill Smith, a Washington, D.C.-based tax lawyer with CBIZ business advisory firm, said: “It’s almost certain that TCJA provisions will be extended.”

1. Portfolio sales

You can already see any gains or losses in your case, dummy 1.The transaction that you want to add now has been added to dummy 2.(But we’re talking about taxable brokerage accounts here; any changes inside an IRA aren’t as relevant.)Finally, if there are any unrealized capital losses, it would be better to harvest them.

2. Conversions

Aftertax (or Roth) IRAs are more valuable than pretax IRAs. Converting a pretax IRA to a Roth IRA is a logical way to do this, as long as the converted amount is tax-free. However, if you are converting, you will need to be careful not to overpay for it.

Price depends on your tax bracket. So, if you’re in the 24% federal bracket (taxable income of $201,051 to $383,900 on a joint return), you’ll pay $10,000 less in federal tax than you would if you converted $2,400. That’s $2,780. Now, your investment income is pushed into the 3.8% investment income surtax range.

You can’t tell anything by looking at the bracket table. Look, compare dummy 1 if it’s not converted, and dummy 2 if it’s converted.

THE MEDICARE SNATCH

The government is putting sunscreen on the prosperous Cirrus by raising Medicare premiums. If you are over 63, then look at the table.Your income from T24 will determine the premium increase for T26.

Where will the T24 income limits and surcharges for 026 premiums be announced, it will be at the end of next year.Forbes’ table shows the prediction for the year.

The surcharge is annualized, and Medicare filing a joint return is required, so the Part B (doctor) and Part D (drug) premium surcharges combine, but the basic premium is included.

The Medicare Stealth Tax

Modified AGI1 in 2024 Surcharge2 in 2026

3. Bunching

A married couple’s standard deduction is $29,200, and the total amount of itemized deductions is $29,200.

If you donate to a donor-advised fund, you will receive a lump sum payment If you have money, software is a deduction for appreciated securities, and your adjusted gross income is 30% of your total income.

4. QCDs

Age 70½ is up, you can make “qualified charitable distributions” to charity up to $105,000 per year in a donor-advised fund (IRA). This is a powerful way to show generosity, because taxable IRA assets are now taxable income, not adjusted gross income (AGI).

AGI has a significant impact on your tax return – it’s a part of your Medicare premiums (boxed).

So what’s the deal: Are you a QCDs investor, or are you a donor fund investor? It depends on your income, share-based original cost, and AGI impact. So, why not experiment with it?

5. Salary deferral

The 401(k)-te is $23,000 per year (or $30,500 if you’re 50+). What’s the limit for 2024? That’s a buzzer-beater! Employees, who are tolerant of the payroll department, will have to pay their paychecks to get their contributions back. If you’re self-employed, you can still save up to $100,000 by December 31.

What’s the best way to deduct deductible 401(k) contributions, or is it better to have a Roth after tax (Roth)? Gig workers are eligible for the 20% pass-through deduction—a move Trump made in 2017.

Eligibility AGI is Depending on. Let the software do the work—two dummy return create kore let it figure out for you!

6. Withholding fix.

How do you calculate estimated tax payments? Fill out the dummy return and chart estimated payments (January is the first month), and add the expected withholding amounts on your W-2. As you can see, underpayments are subject to a penalty.

April, June, and September are insufficient payments that can be revised.

This penalty can be avoided by paying the full amount. The payroll department (if you cooperate) will adjust your last paycheck withholding. Now, the IRS will deduct 52 equal amounts from your W-2 withholding, and you will add the final lump sum.

You will need to make 73 of your required IRA distributions, and you will need to apply the same technique to your last IRA payout.

Software tips:

If you are a regular tax software user, you can quickly process your dummy return. Just open the 2023 program, copy and save your 2023 return, and then copy and experiment.

Dummy 1 will show you all the key entries (including W-2s, dividend 1099s, and Social Security amounts) and adjust your total income to match inflation. If you copy and save Dummy 2, you will need to add a Roth conversion adjustment to your Dummy 2.

Bracket boundaries are exact, but the difference between Dummy 2 and Dummy 1 is the real result.

Here is a shortcut to using TurboTax’s What-if feature. The Forms section is called the “What” search. The software directly inserts the estimate into the “Current Tax Return” column, ignoring the other columns.

Then, Column 2 contains the base-case estimates and Column 3 contains the increments input. The program displays the result in Column 4 along with Column 2 and Column 3.

Note: If the software encounters a bug, the data in Column 4 must be erased and recreated, and the remaining columns must be changed.

Summary:

If you’re a regular user of tax software, you can significantly streamline the dummy return process. By using your 2023 tax program, save a copy of your previous return, and make adjustments like inflating key entries (e.g., W-2s, 1099 dividends, Social Security amounts).

This helps create a realistic baseline (Dummy 1) and allows you to test scenarios like Roth conversions in another version (Dummy 2). While bracket boundaries may not be perfect, the differences between Dummy 1 and Dummy 2 provide close estimates.

Alternatively, TurboTax’s What-if feature is a powerful tool for scenario planning. You can input base estimates in Column 2 and increments in Column 3.

The program calculates the results in Column 4. However, due to a software glitch, you’ll need to manually clear and recreate Column 4 whenever changes are made.

By using these techniques, you can efficiently analyze tax implications and make more informed financial decisions.