Year-End Financial Planning Checklist

Written By: Brian Ellenbecker, CFP®, EA, CPWA®, CIMA®, CLTC®

Another year-end is in sight! In addition to planning for the holidays, finances are also on people’s minds. There is still time to take action on some last-minute financial planning items if you act fast.

There is a checklist at the bottom of this page titled “What Issues Should I Consider Before the End of the Year”. Use this as a general guide to your year-end planning. Let’s review some of the most common issues you can still plan for before 2025 arrives.

Potential Tax Law Changes

Most experts are predicting current tax law will be extended beyond its current sunset in 2026.  While the majority of the law will likely be extended as is, it’s also likely that some parts will be changed. Adjustments to itemized deductions, including the $10,000 cap on state income and property taxes, are one of the key areas to keep an eye on.

The best advice is to be patient, see how things play out, and then adjust your tax strategies accordingly.

Timing of 2024 Property Tax Payments

One of the few action items that could make sense for some homeowners revolves around the timing of when you pay your property taxes for 2024. If you itemize deductions and your property taxes plus state income taxes already exceed the $10,000 cap, consider deferring the portion of property taxes that put you over the $10,000 threshold into next year. If the SALT cap increases or is removed, you will likely be able to deduct more expenses next year. If the SALT cap remains at its current levels, no harm is done, as you wouldn’t have been able to deduct that amount anyway.

When determining the amount to defer into 2025, don’t forget to pay attention to potential state tax benefits. For example, WI gives residents up to a $300 credit on property taxes paid. This credit is maxed out after you pay $2,500 in property taxes. WI residents will probably want to pay $2,500 in property taxes in 2024 to ensure they maximize that deduction.

Charitable Giving

If you plan to give to charity by the end of the year, talk to your tax advisor to ensure you do so in the most tax-beneficial way possible. Gifting appreciated securities or donating to charity directly from your IRA via a qualified charitable distribution (QCD) are two of the easiest and most tax-efficient strategies available.

Reminder: QCD checks must be cashed by 12/31. If you’re banking on that distribution to count towards your required minimum distribution, you could fall short if the charity doesn’t cash the check by year-end. To ensure a timely distribution, don’t wait until the last minute. We recommend any checks being written from your IRA be sent off no later than Monday, December 16. You may want to also include a note reminding the charity to be sure to cash the check by December 31.

Maximize Your Contributions

Check on your retirement accounts to make sure you made the maximum contribution or are at least contributing as much as you can afford. If you contribute to a pre-tax employer plan or IRA, the contributions typically reduce your income. If you contribute to a Roth, you don’t get a tax deduction, but the assets grow tax-free.

If you’re eligible to make a health savings account (HSA) contribution, consider doing so. It’s the only account with a triple tax benefit – deductible contributions, tax-deferred growth, and tax-free withdrawals if used for qualified medical expenses. To be eligible, your health insurance plan must be a qualified high deductible health plan (HDHP). A special rule for HSAs does not require you to take distributions in the same year as you incur the expense. You can wait years and years to reimburse yourself for a qualified medical expense, allowing the money to grow tax-free for a longer period of time.

Higher Retirement Catch-Up Contributions in 2025

If you are saving to a 401(k), 403(b), governmental 457, or the federal Thrift Savings Plan and are between the ages of 60-63, you will be entitled to a higher catch-up contribution of $11,250, rather than $7,500 for other individuals age 50 or older.

Required Minimum Distributions (RMDs)

Don’t forget to take RMDs from your retirement accounts, if you haven’t yet done so. If you inherited an IRA from a non-spouse who passed away in 2020 or later, annual RMDs have currently been waived; however, they will be required starting in 2025. Consult with your tax advisor or Shakespeare advisor to confirm whether a distribution is required for 2024, if you are uncertain.

1099 Tax Form Reminders

In early to mid-February, Schwab will send out the 1099 forms to help you prepare your 2024 tax return. If you are a new client of Shakespeare in 2024, you will not only get 1099s from Schwab, but you will still get 1099s from your previous custodian, too. Be on the lookout for all your forms, and be sure to take them to your tax preparer.

Tax Tip: If you are 70.5 or older and taking qualified charitable distributions from your IRA, those tax-free distributions are not reported on your tax forms. Be sure to let your accountant know about these distributions so they are not accidentally reported as taxable.

For more year-end planning ideas, watch Brian Ellenbecker’s 2023 Year-End Tax & Financial Planning Webinar below:

If you have any questions related to our personal situation, reach out to your Shakespeare Financial Advisor.

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