Tax year 2023 is shaping up to be one with relatively few surprises. There is no major pending tax legislation, and investment returns have been fairly moderate for most asset classes. But there are some things to keep in mind as we head into November; here, Senior Wealth Strategist Glen Goland, JD, CFP®, outlines five important year-end tax planning tips.

1. Charitable giving deadlines

The fourth quarter is often the busiest fundraising quarter for non-profits. Their donors have a sense for how their finances are shaping up for the year and are able to use this information to make giving decisions. This uptick in charitable giving increases the workload for the institutions as they process these gifts. If you intend to gift stock, set up a donor-advised fund, or are planning any sort of giving that carries an administrative burden, best practice is to get that going as early as possible. Some custodians will not guarantee that gifts made after December 1 will be processed in that tax year.

2. Review dividend and interest payments on your taxable accounts

Investors are finally earning some yield at the bank and on the bonds that they hold in their portfolios. This income will be taxable in most instances, so make sure you have your eye on this if you are doing tax planning for year-end.

3. Carried Tax Losses

Many investors booked losses in taxable investment accounts in 2022. It is worthwhile to look at whether these losses can be applied to gains in 2023, particularly for investors who have sold real estate or other assets with taxable gains.

4. Keep an eye out for mutual fund capital gain distributions

Mutual funds will be closing their books for the year, which means it is just about time for them to distribute the capital gains that have been realized during the calendar year. Many mutual funds booked substantial losses in 2022 and have carried these tax losses into 2023, leading to expectations that most funds ought to have fairly small distributions in 2023. Your advisor can talk with you this fall about which funds have released estimates and, if so, what those estimates look like.

5. 2025 in focus

The income and estate tax provisions of the 2017 Tax Cuts and Jobs Act are set to expire at the end of 2025. It was long-assumed that Congress would extend these tax cuts, but the current state of Congress (and U.S. politics more broadly) makes it less and less likely that a compromise will be met to extend those benefits. As a result, families with over $10m in net worth should be talking with their legal and tax teams about how these rules will impact the taxation of their assets at death. High income earners may also want to look at recognizing income now where possible to take advantage of current low tax rates.

If you would like to discuss your year-end tax planning or have any questions about these topics, please feel free to reach out to your Arnerich Massena advisor.