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Year-end tax checklist for optimal financial health

It’s almost year-end and there’s just enough time to check your list (check it twice) for optimal financial success.

Consider a few last-minute tax strategies and always consult your tax advisor if you have questions about taxes.


Tax loss harvesting - The market’s doldrums this year provide a unique opportunity for investors to capture losses and plan for tax-free profits in the future. Keep in mind that selling to cash keeps you out of the market only to miss out on the moment the market turns higher. The best strategy is to sell the loss and purchase something else on the same day. Your financial institution will track these losses for tax purposes.

Net investment income tax (NIIT) - if your income is over $200k ($250 married), your investment income is subject to federal & state tax, and in this case, also NIIT of 3.8%. Tax-free investments, such as municipal bonds, and retirement plan distributions are exempt from NIIT.^1

Mutual fund year-end distributions - always watch out for embedded mutual fund capital gain distributions that typically happen at year-end. If the intention is to sell the fund at some point, always do this before the distribution happens as it's taxed to the investor as either a short or long-term capital gain whether or not the fund is sold.


Workplace 401(k) - if your employer offers a 401(k), you can defer up to $20,500 (plus $6,500 "catch-up" if 50+). If you're behind you can direct your last paycheck to fill up this bucket which would give you the associated tax deduction and put more away for retirement. There may be a Roth 401(k) option that doesn't give the deduction but provides for tax-free investment growth and distributions in retirement. Contribution allowances increase next year to $22,500 (plus a $7,500 "catch-up").

Workplace after-tax plans - Some employers go above and beyond and let their employees make “after-tax contributions” to their 401(k) plans, making the total 401k contribution up to $61,000 (2022) and $66,000 (2023) plus “catchup” of $6,500 for people 50+. After-tax portions can be converted into your Roth IRA as another means to get your tax-free bucket filled, aka Mega Backdoor Roth. ^2


Health Savings account - if your health plan allows it, you can open and fund an HSA for $3,650 for individuals and $7,300 for families, plus $1,000 for those 55+ (tax year 2022). Contributions are deductible and can be invested, grown, and distributed tax-free on qualified medical expenses. Best used later in retirement, which is when health expenses tend to be higher.


Charitable gifting - If you do a standard deduction the most you can give and deduct is $300 (single)/ $600 (married). This limit is removed if you itemize your deductions and you can then give and deduct up to half of your income each year and carry forward the balance each year.

Stock Gifting - If you’re sitting on appreciated stock or property, you can transfer it to a charity or a friend (note that gift tax may apply if over the $16k/person gift limit), who would then sell the stock at their own tax rate and not yours. The simplest way to gift stock to a charity last minute but would rather not designate the charity just yet is to transfer your stock to a charitable trust or giving account (link).

Qualified Charitable Distribution (QCD) - If you’re over 70.5, you can transfer some of your IRA to a charity and avoid paying the income tax on the distribution. This is especially helpful for those 72 and older, who must make heavily taxed required minimum distributions.

Self-employed individuals

Solo 401k - If self-employed without employees, you may be able to open and fund an Individual 401(k) up to $61,000, including both employee and employer contributions, plus a “catchup” of $6,500 for people 50+. (Also depends on net business income.) You can make either pre-tax (deductible) or Roth (after-tax) employee contributions.

Accounting - You may be able to accelerate expenses or defer income into the next calendar year. This is particularly helpful if you’re about to cross into the next higher tax bracket.

At Eureka Wealth Management, I work with my clients’ tax advisors to prepare smart tax strategies and help clients implement them. I also do financial planning, investment management, and broker insurance. Call for a free, initial consultation at (76) 537-0791 or book online at


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