As we come towards the end of 2019, we would like to take the time to ensure all of our readers are implementing the right strategies to reduce their tax bill or avoid penalties.

As always, please consult with your tax advisor before making any changes or implementing any tax strategies discussed herein. We are not tax advisors and everyone’s personal financial situation is different.

Step one. Try to estimate your total 2019 income and any possible deductions. This is always a good exercise to undertake BEFORE the end of the year.

Why?

1) It leaves no surprises come tax time. If you have a potentially larger tax bill than the prior year it leaves you several months in advance (April 15 or October 15, depending on how you file) to begin to alter your spending and save for the bill. If you have a smaller expected bill than the prior year it allows you to think about the extra money you may have on hand. You could invest it, consider charitable donations in early 2020, etc…

2) It allows you to consider deferring or accelerating income or deductions. It allows you to make informed decisions about taking a gain or loss on the sale of property or investments. It allows you to make informed decisions about charitable giving and medical expenses.

3) It is easier to talk to your tax advisors between now and the end of the year. Between January and October most good tax advisors are very heavily involved in preparing tax returns. Of course, there is a plethora of work for them around the dates of April 15th and October 15th that you want to avoid. Now is a great time to get in front of your tax advisor to help you plan your tax strategies for 2019 and beyond.

Things to do right now:

1) Check your unrealized and realized gains and losses from investment activities. Your advisor should have this information available. This will help you understand the tax consequences of your trading activity for the year.

2) Consider a “tax loss harvesting” strategy to further reduce any gains you may have taken through the year. Clients of SWM will automatically have this done.

3) Review your portfolio (or have your advisor review it) to ensure your asset allocation is in line with your goals.

4) Review your 401(k), 403(b) and IRA or ROTH IRA contributions. Try to max out these contributions if you can. The tax savings alone in some situations can be significant. Some of these accounts can accept contributions for tax year 2019 up until April 15 of the following year, others may not. If you’ll be age 50 or older at any time during the calendar year, take advantage of “catch-up” contributions (an extra $6,000 for a 401(k) plan and an added $1,000 for an IRA).

5) If you have children, create or add to your educational savings. 529 plans are a great way to save for college.

6) Do you have a flexible spending account at work? Make sure you have enough medical expenses in 2019 to meet the amount you set aside. If you don’t, you’ll lose the money. If you have extra money in the flexible spending account to spend, you might want to buy medicines you need next year, schedule end-of-year appointments or buy new prescription glasses.

Things to do before year-end:

1) If you are 70 1/2 or older (or have an inherited IRA that was already taking distributions), take your required minimum distributions. Ask your tax advisor about the benefit to you of making a Qualified Charitable Distribution. This may reduce your tax bill.

2) If you are on Medicare, review your Part D choices. The window to make changes closes in December.

3) Consider and make any ROTH IRA conversions. This can be a powerful tool in your retirement plan and can potentially bring you significant tax savings down the road. The lower tax rates afforded by the new tax laws might offer a great opportunity to make the conversion today without feeling like your tax bill has increased.

4) Make gifts to individuals or charities. That annual gift tax exclusion (non-reportable) is $15,000 for individuals in 2019.

5) Make your educational savings contributions. For tax gifting purposes this needs to be made by December 31.

Other items to consider:

1) Review your beneficiaries and make any changes due to life changes.

2) Review your insurance coverage to ensure it is adequate.

3) Review your trust or consider setting up a trust if you do not have one. A trust is a powerful tool to ensure your legacy is protected and your wishes are abided by after you are gone.

4) Order a copy and review your credit reports.

As always, with any or all of the items above I am happy to help you answer any questions. Never hesitate to reach out for guidance or help at any time.

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Investment Products are Not FDIC Insured. No Bank Guarantee. May Lose Value. Investing involves risk. All written content on this website is for information purposes only. Opinions expressed herein are solely those of Shorepine Wealth Management, unless otherwise specifically cited. This is neither a solicitation of offers to buy securities nor and offer to sell securities. Past performance is no guarantee of future results. Material shown here is believed to be from reliable sources however, no representations are made by our firm as to another parties’ accuracy or completeness. All information or ideas provided should be discussed in detail with an advisor, accountant or legal counsel prior to implementation. Shorepine Wealth Management, LLC is a registered investment adviser offering advisory services in the State of California and in other jurisdictions where exempted or registered.