Y H & C Investments: Timeless Tax Strategies

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tax strategies

Y H & C Investments: 

Timeless Tax Strategies


By Yale Bock

As the season draws near, it’s understandable that taxes might not be at the front of your mind. While talking about taxes may not be the most joyous of topics, proactive planning can lead to big savings for your overall financial picture, which is certainly a reason to celebrate! Taking some time to prepare now could have a big impact when April arrives. Here are the top tasks to tackle before December 31 so you can pocket more of your hard-earned money and ring in the new year with confidence and peace.


The IRS allows investors to offset their capital gains with similar capital losses. If you happen to be holding a losing investment, now might be a good time to sell it so that you can use the loss to offset your capital gains for this year and therefore lower this year’s tax bill. You can use this strategy with real estate or other investments like stocks, bonds, or ETFs.


Contributing to charity can lower your tax bill if you itemize your deductions. And it doesn’t have to be just money that you donate. Clean out your closet and kitchen cabinets and take a box over to your local 501(c)(3) thrift store. As long as they give you a receipt for the donation, you will be able to itemize and deduct whatever the fair market value is for the items.

If you have appreciated stock, you can get an even greater benefit by donating it to charity. You get to deduct the fair market value of the stock as a charitable contribution and the charity is not liable for the capital gains. 


With the new, higher standard deduction created by the Tax Cuts and Jobs Act, many of those who are charitably inclined are considering donor-advised funds. Donor-advised funds work as charitable giving savings accounts where you get a deduction when you put the money into the fund, not when you distribute it to a charity. 

If your itemized deductions are close to the standard deduction, you can open a donor-advised fund and put a large sum of money into it in 2023. You get to take the tax deduction for this year but hand the money to charities over time. Then, in 2024, you may not have deductions for your charitable giving, but you can still take the standard deduction. (1)


If you are 73 or older, you are required to take minimum distributions from your retirement accounts (except Roth IRAs). In the year that you turn 73, you have until April 1 of the following year. After that, the money must come out of your account by December 31. 


Another way to lower your income, and therefore your tax bill, is by deferring that income until retirement. In 2023, you can contribute up to $22,500 to a 401(k) plan, which will remove that money from your current taxable income. If you are 50 or older, your yearly contribution limit goes up to $30,000. You can put up to $6,500 in any type of IRA; $7,500 if you are over age 50.


If you have lower income than normal in 2023, then it might make sense to convert your traditional IRA to a Roth. In doing so, you would pay the income taxes on the money now, at your 2023 rates, so that you could take all withdrawals tax-free in retirement.

Another benefit of having your money in a Roth account is that it is not subject to required minimum distributions as discussed above. Once your money is in a Roth IRA, you can leave it in there to grow as long as you’d like.


If you have access to a health savings account (HSA) with your high-deductible health plan, you can enjoy triple-tax savings with no federal income tax, no state or local taxes, and no Federal Insurance Contribution Act (FICA) taxes. Your contributions are tax-deferred and withdrawals are tax-free for medical expenses. 

Since your balances roll over from year to year, you can max out the account without worrying about using it up right away. For 2023, the contribution limit is $3,850 for an individual and $7,750 for a family, with a $1,000 catch-up bonus for those over 55.


If you have a college student, consider paying next term’s tuition before December 31. Any tuition you pay for the first four years of undergraduate study is eligible for the American Opportunity Tax Credit. This can save you up to $2,500 per student on your tax bill depending on your expenses and income. If you are the one doing the studying, you may be eligible for the Lifelong Learning Credit.


If you’re still working on saving for your children’s college education, then you may benefit from putting some money into a 529 plan before the year’s end. This won’t help with your federal tax bill, but it might lower your state taxes. Many states allow deductions for contributions to the state’s 529 plan and some even allow them for contributions to other plans. 


As laid out in this article, you can see all the different ways to prepare and optimize your finances during the final weeks of the year, all while enjoying the holiday season. If you’d like support in putting any of these strategies into action or wish to gain deeper insights into our client-focused approach, don’t hesitate to reach out. Schedule an appointment at [email protected] or schedule a meeting here. We’re here to help you pursue your financial goals with confidence.