As we near the end of this extended tax season, we wanted to share our 5 yearly tax essentials to begin considering for your 2021 tax situation. It is never too early to start planning to ensure that you don’t miss out on tax opportunities or aren’t surprised come tax time.

  1. Required Minimum Distributions
    • If you’re over the age of 72, remember you may need to take the required minimum distributions from your retirement accounts.
  2. IRS PIN
    • If you have been the victim of prior IRS identity theft, you’ll be mailed a one-time use personal identification number (PIN) that will be required to file your Form 1040. Make sure to keep this PIN, do not throw it out.
  3. Retirement Contributions
    • You have the ability to make maximum contributions of $6,000 to Traditional or Roth IRA accounts within the calendar year. If you are over 50, you can add an additional $1,000 allowing you a contribution of $7,000.
  4. Harvest Gains & Losses
    • Profits and losses on investments have their own tax rates. From 0% to 37%. It is a good idea to make plans to do an annual tax review of your investments each year. This includes:
      • Making full use of the $3,000 annual loss limit on investment sales
      • Understanding investments held longer than one year have lower tax rates as long-term capital gains
      • Try to net ordinary investment sales with ordinary investment losses
  5. Tax Moves
    • Some ideas worth considering, ideally before the very end of the year
      • Make donations to charities to maximize individual deductions
      • Consider charitable contributions (up to $100,000) from retirement accounts if you are 72
      • Make tax efficient withdrawals from retirement accounts if you’re older than 59 ½
      • Take advantage of the annual $15,000 gift-giving limit
      • At the end of the year, delay receipt of income or accelerate expenses if you’re a small business

If you have any questions regarding your tax situation, please do not hesitate to contact us and we would be happy to help. And don’t worry, we’ll be sure to remind you of these tips towards the end of the year before it’s too late.