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Have You Optimized Your Tax Reduction Strategies?

  • Oppenheimer & Co. Inc.
  • December 5, 2023

As the end of the year approaches, it's an opportune time to consider tax reduction strategies to optimize your financial situations. Proper tax planning can help individuals and businesses minimize their tax liabilities, thereby retaining more of your hard-earned money.

Here are 10 tax reduction considerations to think about before the end of the year (As always, please consult with a CPA, Oppenheimer Financial Professional, or tax advisor to see how these strategies may or may not impact your specific situation):

tax reduction
  1. Maximize Retirement Contributions
    • One of the most effective ways to reduce taxable income is to maximize contributions to your retirement accounts. For individuals, contributing to a 401(k), 403(b) or an Individual Retirement Account (IRA)* can lower your taxable income. For businesses, offering retirement plans like SEP IRAs or 401(k)s not only helps employees save for retirement but may also allow the business to deduct contributions up to a certain amount.

*IRA Contribution Eligibility is Subject to Modified Adjusted Gross Income (MAGI) limitations

  1. Harvest Tax Losses
    • Tax-loss harvesting involves selling investments that have declined in value to offset realized capital gains, thus reducing your tax liability on gains. When capital losses are greater than capital gains you may be able to deduct up to $3,000 from your taxable income. Losses that exceed $3,000 can be carried forward and used in future years.
  1. Charitable Giving
    • Donating to charitable organizations not only supports a good cause, but also offers tax benefits. Overall deductions to public charities, as well as donor-advised funds, generally allow you to donate up to 50% of your AGI (adjusted gross income). The limit increases to 60% for cash gifts. You can also consider donating appreciated securities held for more than one year.  If you’re at least age 70 ½, Qualified Charitable Distributions of up to $100,000 may be made tax-free from your IRAs.
  1.  Tax Efficiency of Your Asset Allocation (and Asset Location)
    • Consider the tax-efficiency of the investments in your portfolio. Certain options such as government bonds or municipal bonds may provide certain tax benefits. Others, such as mutual funds, tend to distribute capital gains to the investor (i.e. you) whether you’ve sold the fund or not. The type of account you hold these securities in matters also. A tax-deferred (IRA) or tax-free (Roth IRA) account may be better suited for investments that carry potential tax burdens while after-tax accounts may be better suited for investments that are more tax efficient.
  1. Review and Adjust Withholding
    • You should review your tax withholding throughout the year to ensure you are not overpaying or underpaying taxes. Adjustments may be necessary due to changes in income, deductions, or tax laws. Accurate withholding can help avoid penalties and maximize cash flow.
  1. Take Advantage of Tax Credits
    • Tax credits can directly reduce the amount of taxes owed. You can explore available tax credits, such as the Child Tax Credit, Earned Income Tax Credit (EITC), and various energy-related credits, to lower their overall tax liability.
  1. Estate and Gift Planning
    • Estate and gift planning can be essential for wealth preservation and minimizing estate taxes. Consider strategies such as gifting assets to family members now or to heirs, establishing trusts, or leveraging the lifetime gift tax exemption to pass on assets tax-efficiently. The IRS allows for anyone to gift up to $17,000 in 2023 per person.
  1. Defer Income
    • If you anticipate a lower tax rate in the future or wish to reduce their current tax burden, you can consider deferring income into the following tax year. This may involve delaying the receipt of bonuses or income from investments until after January 1st.
  1. Capitalize on Small Business Tax Deductions
    • Small business owners should take advantage of available deductions such as:
      • Business expenses
      • Employee-related expenses
      • Home office deduction
      • Education and training
      • Advertising and marketing
      • Qualified Business Income Deduction (QBI)
      • Retirement Plan Contributions and startup plan costs
      • Travel expenses 
      • Health Savings Accounts (HSAs) and Flexible Spending Accounts (FSAs)
  1. Consult with Tax Professionals
    • Finally, it's important for you to consult with tax professionals, such as certified public accountants or tax advisors, to ensure you are making informed decisions that align with your unique financial situations. Tax laws are complex and are continually evolving, making professional guidance invaluable.

Before the year draws to a close, you may still have an opportunity to implement these tax reduction strategies to optimize your financial positions. Proper planning and consultation with a financial and tax professionals are key to success.

Oppenheimer financial professionals are here to help. Find one near you today.


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This material is not a recommendation as defined in Regulation Best Interest adopted by the Securities and Exchange Commission. It is provided to you after you have received Form CRS, Regulation Best Interest disclosure and other materials.

This information is general in nature, does not constitute legal or tax advice, and is subject to change. Neither Oppenheimer & Co. Inc. nor any of its employees or affiliates provide legal or tax advice. Individuals and plan sponsors should consult with their legal or tax advisor.