Year End Tax Planning

Marci RomneyBlog

Individual Tax Planning

When doing your individual tax planning, look ahead to the overall impact on 2019 and 2020. The end gamed is to reduce your taxes over both years. Most people, but not all, will benefit by accelerating write-offs from 2020 into 2019 while deferring taxable income. 

Taxpayers who claim itemized deductions have flexibility in shifting write-offs, why can allow many tax savings opportunities. For example, if you make the Jan. 2020 mortgage payment before the end of the year, you can deduct the interest portion in 2019. Make any donations planned for 2020 in 2019, and think about getting and paying for an elective procedure this year (if your 2019 medial costs have topped, or are close to, the 10%-of-AGI threshold.)

Donations and Gifts

During the holiday season, make the most of your generosity when donating to charitable organizations. Contribute stocks or shares in mutual funds. If you’ve owned the property for more than a year, you can deduct its full value in most cases, but don’t donate property that has declined in value since you acquired it. If you do, the capital loss is wasted and you’re better off selling it.

Take advantage of the annual gift tax exclusion. You and your spouse, can each give up to $15,000 to a singular person in 2019 without paying gift tax. And use it in 2019 because any unused amount is gone forever, so you can’t give extra next year.

You can also contribute to 529 plans to help your kids or grandkids with their education. You can pay in up to $75,000 in a single year per beneficiary ($150,000 if your spouse joins in). This contribution will be treated as a gift to the beneficiary in 2019 and the years to follow.  

Pay attention to the timing rules for charitable donations and gifts. For charities, put checks in the mail by year-end to ensure a 2019 deduction. For charges made with a bank credit card, you can claim the write-off in the year you charged the expense. For gifts, the recipient must deposit a check by Dec. 31 for it to count as a 2019 gift.


Your investment portfolio provides plenty of tax savings opportunities. Think about selling some poor performers. Capital losses that you incur can offset your capital gains for this year and the next, if there is extra. But bear in mind the wash-sale rule, which bars a capital loss write-off if you purchase an identical securities 30 days before or after a sale. 

If you have capital loss carryforwards, cull your portfolio for capital gains. That’s because your net gains (up to the carryover amount) won’t be taxed at all. See if you qualify for the 0% rate on long-term gains and qualified dividends. If taxable income other than gains or dividends does not exceed $39,375 for singles ($78,750 for joint filers) then dividends and profits on the sales of assets owned for more than a year are taxed at 0% until they push you over the threshold amounts. Some words of caution on the 0% rate: Zero-percent-rate gains and dividends might not be taxed at the federal level, but they do hike adjusted gross income. Also, your state income tax bill may rise, as many states tax gains as ordinary income.

Take steps to limit the sting of the 3.8% surtax on net investment income like taxable interest, dividends, gains, passive rents, annuities, royalties, etc. Singles with modified AGIs over $200,000 ($250,000 for couples) could owe the tax. It’s due on the lower of net income from investments or the excess of modified AGI over the thresholds. To keep the surtax at bay, consider buying municipal bonds.

If you invest in REITs or publicly traded partnerships you could get a nice tax break. Holders of interests in real estate investments trusts and PTPS can use the 20% deduction for pass-through income. Individuals can deduct 20% of their qualified REIT dividends and 20% of their allocable share of a PTP’s qualified income.

Individuals who buy stock in a C corporation with assets of $50 million or less directly from the company after Sept. 27, 2010, and hold it for more than five years can exclude 100% of their gain when they sell. The gain is exempt from the AMT, too. However, stock in certain types of businesses such as banking, insurance, leasing, oil and gas, and personal service firms do not apply.

To avoid the trap of prepaying tax to the IRS be wary of buying a mutual fund late in the year for your taxable portfolio and buy the stocks after the dividend record date.

This can be a lot to process and understand. For more information visit If you have any question please reach out to us through our email ( or give us a call at 801-685-7600.