Top 15 Tips: Your Year-End Financial Checklist

As 2023 winds down, it’s time to gear up for a financially savvy 2024! We’ve got you covered with expert tips to boost your savings, slash your tax bill, and keep your financial goals on track.

Max Out Retirement Contributions

Employer Retirement Plans

Deadline: Ensure contributions to employer-sponsored retirement plans like 401(k)s are completed by December 31, 2023.

Benefit: Contributions are typically made pre-tax, reducing taxable income for the year.

Individual Retirement Accounts (IRAs)

Deadline: IRA contributions for 2023 can be made until the tax-filing deadline in April 2024.

Traditional IRAs: Contributions may be tax-deductible, depending on income and whether you’re covered by a workplace retirement plan. The deductibility reduces taxable income.

Roth IRAs: Contributions are made with after-tax dollars and do not provide an immediate tax deduction, but offer tax-free growth and withdrawals.

Make sure you are saving enough for retirement.

Key Considerations

Contribution Limits: Be aware of the annual contribution limits for both 401(k)s and IRAs.

Income Limits for IRA Deductibility: Understand how income limits affect the deductibility of IRA contributions, especially if you or your spouse are covered by a workplace retirement plan.

Roth vs Traditional: Choose between Roth and Traditional IRAs based on your current tax rate, expected future tax rate, and retirement planning strategy.

More information on Retirement Contributions.

Take Required Minimum Distribution (RMD)

General RMD Requirement

Deadline: For most retirement accounts, RMDs must be taken by December 31 each year. This applies to traditional IRAs, 401(k)s, and other employer-sponsored plans.

First-Time RMD for Age 73

Specific Rule: Individuals turning 73 in 2023 have a special deadline for their first RMD. They can delay this initial withdrawal until April 1, 2024. However, they must still take their 2024 RMD by December 31, 2024.

Inherited IRAs

10-Year Rule: For IRAs inherited after December 31, 2019, the entire account must be withdrawn by the end of the 10th year following the year of the original owner’s death. There’s flexibility in how distributions are taken throughout this period.

Key Considerations

Accurate Calculation: Ensure the RMD amount is correctly calculated based on your age and account balance. Many financial institutions provide this calculation.

Multiple Accounts: If you have several IRAs, calculate the RMD for each but you can withdraw the total amount from one or more of the IRAs. For 401(k)s, RMDs must be taken from each plan separately.

Tax Implications: RMDs are taxable as ordinary income in the year they are withdrawn. Plan your withdrawals considering your current tax bracket.

Penalties for Non-Compliance: Failing to take an RMD can result in a significant penalty 50% of the amount that should have been withdrawn.

More information on RMDs.

529 Education Savings Plan Contributions

Should You Invest in a 529 College Savings Plan?

Contribution Deadline

General Deadline: Most states require contributions to 529 education savings plans to be made by December 31, 2023, for them to count for the 2023 tax year.

State-Specific Extensions: Some states, like Georgia, Mississippi, Oklahoma, South Carolina, and Wisconsin, extend the deadline to April 15 of the following year. Iowa allows contributions until April 30, 2024.

Tax Benefits

State Tax Deductions/Credits: Many states offer tax deductions or credits for 529 plan contributions, which can reduce state income tax liability. The specifics vary by state.

Federal Tax: While contributions are not federally tax-deductible, earnings grow tax-free, and withdrawals for qualified education expenses are also tax-free.

Contribution Limits

Annual Limits: There are no federal contribution limits, but states may have their own limits. Contributions must be within the gift tax exclusion limits to avoid triggering the federal gift tax ($17,000 per donor per beneficiary in 2023).

Gifting and Superfunding

Gift Tax Exclusion: Contributions can qualify for the annual gift tax exclusion.

Superfunding: Contributors can front-load five years’ worth of contributions at once without triggering gift taxes, a strategy known as “superfunding” a 529 plan.

Key Considerations

Eligible Expenses: Understand what constitutes qualified education expenses to ensure tax-free withdrawals.

State-Specific Rules: Check the rules and benefits specific to your state’s 529 plan, as these can vary significantly.

Investment Options: Review the investment options within the 529 plan, as these can impact growth and risk.

Beneficiary Flexibility: Remember that the beneficiary of a 529 plan can be changed, offering flexibility for family education planning.

More information on 529s.

Complete a Roth Conversion

Learn more! Roth vs Traditional IRAs: A Complete Reference Guide

Conversion Deadline

Date: Complete any conversion from a traditional IRA to a Roth IRA by December 29, 2023, to have it count for the 2023 tax year.

Tax Implications

Immediate Taxation: Amounts converted are taxed as ordinary income in the year of conversion. This includes any pre-tax contributions and earnings.

No Income Limits: Unlike direct Roth IRA contributions, there are no income limits for executing a Roth conversion.

Strategic Considerations

Tax Bracket Management: Consider the amount to convert to avoid pushing yourself into a higher tax bracket. Partial conversions over multiple years can be a strategy to manage tax impact.

Future Tax Rates: If you anticipate being in a higher tax bracket in retirement, converting to a Roth IRA can be beneficial as withdrawals from a Roth IRA are tax-free.

Long-Term Benefits

Tax-Free Growth: Roth IRAs offer tax-free growth and withdrawals, making them appealing for long-term retirement planning.

No RMDs: Roth IRAs do not require RMDs during the owner’s lifetime, providing more flexibility in retirement planning and estate considerations.

RMDs and Conversion

If you are of RMD age (age 73 or older), you must first take the RMD before converting any remaining balance to a Roth IRA.

Key Considerations:

Conversion Costs: Be prepared for the tax bill associated with the conversion. Calculate the tax implications before proceeding.

Timing: The timing of a conversion can be crucial. It might be advantageous to convert during years when income is lower.

Professional Advice: Consider consulting a tax advisor or financial planner to understand the full impact and strategy behind a Roth conversion, especially regarding its complexity and long-term implications.

More information on Roth Conversions.

Charitable Giving Tax Benefits

Deadline for Tax Deductions

Year-End Giving: Ensure charitable donations are made by December 31, 2023, to qualify for deductions in the 2023 tax year.

Deduction Limits

Cash Contributions: You can deduct cash donations up to 60% of your adjusted gross income (AGI) when given to qualifying public charities.

Non-Cash Contributions: The deduction limit is generally 30% of AGI for donations of assets like appreciated stock to public charities.

Qualified Charitable Distributions (QCDs)

Age Requirement: Available to individuals aged 70½ or older.

Direct IRA Transfer: Funds must be transferred directly from a traditional IRA to a qualified charity.

Exclusion from Income: QCDs are excluded from taxable income, up to $100,000 per year.

RMDs and QCDs: QCDs can satisfy RMD requirements, offering a tax-efficient way to fulfill charitable intentions for those not needing RMD income for personal use.

Tax Filing Status

Itemizing Deductions: To benefit from charitable tax deductions, you must itemize deductions on your tax return.

Learn about Itemized Deductions here.

Standard Deduction: Direct benefits from charitable deductions are not available if you take the standard deduction, although QCDs still offer tax advantages.

Learn about the Standard Deductions here.

Key Considerations

Documentation: Keep accurate records and receipts of all donations for tax purposes.

Valuation of Non-Cash Donations: Properly assess and document the value of any non-cash donations, particularly for items like securities or property.

Charity Eligibility: Verify that the charity is eligible for tax-deductible contributions (501(c)(3) status).

Combined Benefits with QCDs: If you are eligible for QCDs, consider using them as a strategy to fulfill charitable goals while managing RMDs and taxable income.

More information on Charitable Giving.

Health Savings Account (HSA) Contributions

Contribution Limits

For 2023, the HSA contribution limits are $3,850 for individuals and $7,750 for family coverage. If you are 55 or older, an additional catch-up contribution of $1,000 is allowed.

Tax Advantages

Pre-Tax Contributions: Contributions are made pre-tax, reducing your taxable income.

Tax-Free Growth: Earnings in the HSA grow tax-free.

Tax-Free Withdrawals: Withdrawals for qualified medical expenses are tax-free.


Must be enrolled in a High Deductible Health Plan (HDHP).

Cannot be claimed as a dependent on someone else’s tax return.

Contribution Deadline

Contributions for a given tax year can be made up until the tax filing deadline of the following year (typically April 15).

Investment Options

Many HSAs offer investment options, allowing for potential growth of the funds, similar to retirement accounts.

Flexible Spending and Portability

Unused funds roll over from year to year; there’s no “use it or lose it” policy.

The account is portable and stays with you if you change employers or retire.

Key Considerations

Qualified Medical Expenses: Ensure withdrawals are used for qualified medical expenses to avoid taxes and penalties.

Long-Term Strategy: Consider using the HSA as a long-term savings tool for future healthcare expenses, especially in retirement.

Recordkeeping: Maintain records of all medical expenses in case of IRS scrutiny.

More information on HSAs.

Man Reading

Adjusting Tax Withholding

Assessing Current Withholding

Review your current tax withholding on your paychecks. This is crucial if you had a major life event, such as marriage, divorce, the birth of a child, or a change in income.

Using IRS Withholding Estimator

Utilize the IRS Withholding Estimator tool to calculate the correct amount of tax to withhold. This tool accounts for your income, anticipated tax deductions, and credits.

Form W-4 Adjustments

Update your Form W-4 with your employer if adjustments are needed. This form controls how much tax is withheld from your paycheck.

Balancing Refunds and Liabilities

Aim to withhold enough tax to avoid owing a large amount at tax time, while also preventing excessively large refunds, which represent an interest-free loan to the government.

Considerations for Freelancers and Self-Employed Individuals

If you have non-wage income (like freelance or self-employment income), consider making estimated tax payments to avoid underpayment penalties.

Special Situations

Account for additional income sources like bonuses or investment income, which may require additional withholding or estimated payments.

Key Considerations

Regular Review: Regularly reviewing and updating your tax withholding can prevent surprises at tax time and help manage your cash flow throughout the year.

Tax Liability Changes: Be aware of any changes in tax laws or personal circumstances that could affect your tax liability.

Professional Consultation: In complex situations, or if you are unsure how to proceed, consulting a tax professional can provide clarity and ensure accurate withholding.

More information on Adjusting Tax Withholdings.

Tax-Loss Harvesting in Investment Portfolios:

Understanding Tax-Loss Harvesting

This strategy involves selling investments that are at a loss and replacing them with similar investments. The realized losses can offset capital gains realized elsewhere in your portfolio.

Offsetting Capital Gains

Use realized losses to offset both short-term and long-term capital gains. If your losses exceed your gains, you can use up to $3,000 of excess loss to offset ordinary income each year.

Wash Sale Rule

Be aware of the IRS’s wash sale rule, which prohibits claiming a loss on a security if you buy a “substantially identical” security within 30 days before or after the sale.

Rebalancing Portfolio

Tax-loss harvesting can be combined with portfolio rebalancing. This allows you to maintain your desired asset allocation while realizing tax benefits.

Year-Round Strategy

While often associated with year-end planning, tax-loss harvesting can be implemented throughout the year, especially during market downturns.

Long-Term Considerations

Consider the long-term impact on your investment strategy. Avoid making decisions solely for tax reasons that might conflict with your overall investment goals.

Key Considerations

Record Keeping: Maintain accurate records of cost basis and capital gains/losses for tax reporting.

Tax Bracket Awareness: Understand how your current tax bracket impacts the benefits of tax-loss harvesting.

Professional Advice: Consult with a financial advisor or tax professional, especially when dealing with complex portfolios or significant amounts of capital gains and losses.

More information on Tax-Loss Harvesting.

Investing in Municipal Bonds

Tax-Exempt Income

Municipal bonds typically offer income that is exempt from federal income tax. In some cases, if the bonds are issued by your home state or locality, the income may also be exempt from state and local taxes.

Types of Municipal Bonds

General Obligation Bonds: Backed by the issuer’s taxing power.

Revenue Bonds: Secured by specific revenue sources, like tolls or utility payments.

Risk Considerations

Assess the credit risk associated with the bond issuer. While municipal bonds are generally considered lower risk, creditworthiness can vary.

Understand interest rate risk as bond prices move inversely to interest rate changes.

Investment Objectives Alignment

Ensure that investing in municipal bonds aligns with your overall investment strategy and goals, particularly in terms of risk tolerance and income needs.


Consider municipal bonds as a part of a diversified investment portfolio. They can provide a balance to higher-risk investments.

Yield Analysis

Compare the tax-equivalent yield of municipal bonds with taxable bonds to determine if they are a financially advantageous choice for your specific tax situation.

Liquidity and Maturity

Consider the bond’s maturity date and how it fits with your investment horizon. Also, assess the liquidity, as some municipal bonds might be less liquid than others.

Key Considerations

Tax Bracket Implications: Higher-income investors in higher tax brackets may benefit more from the tax-exempt status of municipal bonds.

Quality and Ratings: Review the quality and ratings of municipal bonds to assess default risks.

Market Conditions: Monitor market conditions, as they can affect bond prices and yields.

Professional Advice: Consulting a financial advisor can help in selecting the right municipal bonds based on your tax situation and investment goals.

More information on Bonds.

Energy-Efficient Home Improvements

Available Tax Credits

Homeowners can qualify for tax credits for making certain energy-efficient improvements. These may include installing solar panels, energy-efficient windows, doors, and heating and cooling systems.

Qualifying Improvements:

Check which types of improvements qualify for tax credits. Generally, they must meet specific energy efficiency standards.

Credit Amount

The amount of credit available varies based on the type of improvement. Some credits are a percentage of the cost, while others have a fixed amount.

Installation Requirements

Ensure that the improvements are installed in your primary residence and meet the required standards and dates for qualification.

Long-Term Savings

Beyond the immediate tax credit, these improvements can lead to long-term savings on energy bills.

Documentation and Certification

Keep all receipts and certifications related to the improvements. You may need these for tax filing and to prove eligibility for the credits.

IRS Guidelines

Refer to the latest IRS guidelines or consult with a tax professional to understand the specifics of claiming these credits, as tax laws and credits can change.

Key Considerations

Planning and Budgeting: Plan these improvements considering your budget and the potential return on investment through energy savings and tax credits.

Professional Installation: Some credits may require professional installation or specific products, so choose contractors and materials carefully.

Tax Filing Impact: Understand how these credits will impact your overall tax situation, particularly if you are claiming other deductions or credits.

More information on Energy-Efficient Home Improvements.

Charitable Bunching

Concept of Bunching

Charitable bunching involves consolidating multiple years’ worth of charitable donations into one tax year. This strategy increases itemized deductions for that year, surpassing the standard deduction and maximizing tax benefits.

Impact on Itemized Deductions

By bunching donations, you may be able to itemize deductions in one year and then take the standard deduction in other years. This approach can result in greater total tax savings over multiple years.

Planning the Contributions

Determine the total amount you plan to donate over several years and make the combined contribution in a single tax year.

Use of Donor-Advised Funds (DAFs)

Consider using a Donor-Advised Fund to facilitate bunching. You can make a large contribution to a DAF in one year, qualify for the itemized deduction, and then advise on the distribution of funds to charities over subsequent years.

Charitable Intent and Financial Capacity

Ensure that this strategy aligns with your charitable goals and financial situation. Bunching requires the financial ability to make larger contributions in a single year.

Tax Year Considerations

Align the timing of contributions with your tax situation. For example, if you anticipate a higher income year, it may be advantageous to bunch contributions in that year.

Key Considerations

Record Keeping: Maintain detailed records of all charitable contributions for tax documentation.

Charity Eligibility: Verify that donations are made to qualified charitable organizations for tax deductibility.

Financial Planning: Consider how this strategy fits into your broader financial plan, particularly in years with significant income variations.

Use Flex Spending Account (FSA) Funds

Understanding FSAs

Flexible Spending Accounts (FSAs) are employer-sponsored accounts that allow employees to set aside pre-tax dollars for eligible health care and dependent care expenses.

Year-End Deadline

Generally, you must use the funds in your FSA by the end of the plan year, often December 31. Some plans offer a grace period or allow a small amount to be carried over into the next year.

Eligible Expenses

Healthcare FSAs can be used for various out-of-pocket medical costs, including prescriptions, copays, dental care, and vision care.

Dependent care FSAs cover expenses like daycare, preschool, summer camps, and elder care.

Use It or Lose It

FSAs typically operate on a “use it or lose it” basis, meaning any unspent funds at the end of the plan year (or grace period, if applicable) are forfeited.

Plan Features and Deadlines

Check your specific FSA’s features, as employers can offer different options like grace periods (up to 2.5 extra months to use the funds) or a carryover of up to $570 (as of 2023).

End-of-Year Spending Strategies

If you have remaining FSA funds, consider scheduling last-minute medical appointments, refilling prescriptions, or purchasing eligible supplies like glasses, contact lenses, or first aid kits.

Key Considerations

Review Expenses: Regularly review your FSA balance and plan for eligible expenses to avoid losing unused funds.

Documentation: Keep all receipts and documentation for FSA expenditures in case of audit or review by your employer or the IRS.

Employer Communication: Stay informed about any changes to your FSA, including deadlines and carryover rules, by communicating with your employer or plan administrator.

Education Tax Credits

American Opportunity Tax Credit (AOTC)

Eligibility: Available for the first four years of post-secondary education.

Credit Amount: Up to $2,500 per eligible student per year. 100% of the first $2,000 and 25% of the next $2,000 in qualified education expenses.

Refundable Portion: 40% of the credit (up to $1,000) may be refundable, meaning you can get it even if you owe no tax.

Income Limits: There are income phase-outs, so check the current limits to ensure eligibility.

Lifetime Learning Credit (LLC)

Eligibility: Available for undergraduate, graduate, and professional degree courses, including courses to acquire or improve job skills.

Credit Amount: Up to $2,000 per tax return, calculated as 20% of the first $10,000 in qualified education expenses.

Non-Refundable: This credit is not refundable, meaning it can lower your tax bill to zero but not result in a refund.

Income Limits: Similar to AOTC, there are income limits affecting eligibility.

Qualified Expenses

Both credits apply to expenses such as tuition and fees. The AOTC also includes required course materials.

Choosing Between Credits

You can’t claim both credits for the same student in the same year. Compare the benefits of each based on your expenses and income level.

Claiming the Credit

You need Form 1098-T from the educational institution to claim these credits. Include this information in your tax return.

Key Considerations

Documentation and Record Keeping: Keep detailed financial records related to education expenses.

Dependent Students: The parent typically claims the credit if the student is a dependent.

Nontraditional Students: The LLC offers broader eligibility, including for part-time students and those taking courses to improve job skills.

Tax Planning: Consider your overall tax situation when deciding which credit to claim, as this can impact your total tax liability or potential refund.

Timing of Income and Deductions

Deferring Income

If you expect to be in a lower tax bracket in the next year, consider deferring income. This could involve delaying year-end bonuses, deferring business income, or postponing large financial transactions.

Accelerating Deductions

Conversely, if you anticipate a higher tax rate next year, accelerate deductions into the current year. This can include prepaying state income taxes, making additional charitable contributions, or accelerating business expenses.

Retirement Contributions

Increase contributions to retirement accounts like 401(k)s or IRAs to reduce taxable income, especially if you’re near a higher tax bracket threshold.

Health Savings Account (HSA)

If eligible, maximize contributions to an HSA to lower AGI, as these contributions are tax-deductible.

Managing Capital Gains and Losses

Consider realizing capital losses to offset any gains, and if in a lower tax bracket, you might take advantage of lower capital gains rates.

Flexible Spending Account (FSA)

Utilize FSAs to cover medical expenses, effectively reducing taxable income.

Itemized vs. Standard Deduction

Evaluate whether itemizing deductions or taking the standard deduction is more beneficial in your current tax year, considering potential changes in your tax situation.

Key Considerations

Future Tax Rate Predictions: Decisions should be based on reasonable expectations of your future tax situation.

Income and Expense Planning: Timing income and deductions requires careful planning to meet cash flow needs.

Tax Law Changes: Stay informed about potential or upcoming changes in tax laws that could affect your strategy.

Professional Advice: Consider consulting with a tax professional, especially if you have complex financial circumstances or significant changes in your income.

Check Your Financial Health

Update Beneficiaries

Regularly review and update beneficiary designations on retirement accounts, life insurance policies, and other financial accounts to ensure they align with your current wishes.

Review Insurance Plans

Assess your insurance coverage, including life, health, home, and auto insurance. Ensure that your coverage meets your current needs and life circumstances.

Capital Gains Estimates:

Estimate potential capital gains for the year, especially from investments and real estate. This helps in planning for any tax liability and considering strategies like tax-loss harvesting.

Consider Tax-Loss Harvesting

Review your investment portfolio for any unrealized losses. You can use these losses to offset realized capital gains and up to $3,000 of ordinary income, thus reducing your overall tax burden.

Assess Retirement Contributions

Ensure you maximize contributions to your retirement accounts, like 401(k)s and IRAs, for tax advantages and long-term savings.

Emergency Fund and Debt Review

Evaluate your emergency fund to ensure it’s adequate for unexpected expenses. Also, review your debts and consider strategies for reduction or refinancing if necessary.

Financial Goals and Budgeting

Revisit your financial goals and budget. Adjust them as needed to align with changes in your income, expenses, or life goals.

Estate Planning

Consider reviewing your will, trust, and other estate planning documents, especially if there have been significant life changes like marriage, divorce, or the birth of a child.

Key Considerations

Comprehensive Review: A thorough review of your financial health involves examining all aspects of your finances, from insurance to estate planning.

Regular Updates: Life changes can significantly impact your financial planning, making regular reviews and updates essential.

Professional Assistance: Financial advisors, tax professionals, and estate planners can provide valuable assistance in reviewing and updating your financial health.

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