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Year-End Estate Planning Strategies to Save on Taxes

Dec. 27, 2021

The end of the year is quickly approaching and many people are looking forward to a vacation or spending time with their loved ones. But, before you put your feet up and enjoy the holidays, make sure you take care of some important financial tasks. One way to save on taxes this year is through estate planning strategies. Here are five things to consider for year-end estate planning strategies:


Make Gifts to Reduce Your Taxable Estate

One of the simplest ways to reduce your taxable estate is by making gifts. You can give away up to $15,000 per person, per year, without having to pay any gift taxes. The good news is your gift won’t be considered taxable income for the recipient either! You might look at gifts as an early inheritance that bypasses estate taxes and reduces your taxable income.


Make IRA Contributions

You can contribute up to $19,500 a year to a 401(k), 403(b), or federal Thrift Savings Plan. If you’re 50 or older, you can contribute an additional $6,000 in catch-up contributions.


Consider Charitable Giving as Part of Your Estate Plan

If you are 70 1/2 or older, you can withdraw up to $100,000 from a traditional IRA (tax-free) each year and contribute it to a charity. Your qualified charitable distribution will not be taxed as part of your IRA's required minimum distribution.

You can also use a charitable trust or donor-advised fund to reduce your tax bill while giving back. Donor-advised funds let you control your charitable donations since the fund is in your hands. Even better, money put into a donor-advised fund is deductible. You can subsequently give money to as many or as few organizations as you choose - but they must be used for a charitable purpose.

Manage Your Investment Gains and Losses

You can sell off losing assets to reduce capital gains taxes if the values of your investments have dropped below the amount you paid for them. If it's been a particularly terrible year for your investment portfolio, you can deduct up to $3000 of net capital losses against your ordinary income.

Fund a College Savings Plan

Like many states, Georgia allows you to deduct a portion of your 529 contributions from your state income taxes. You may even be able to contribute to your grandchildren or another relative’s college saving plan as a way of further maxing out your 529 contributions. You can find more information about Georgia’s college savings plans at www.savingforcollege.com.

My Office Can Help You Plan to Save on Your Taxes

If you haven’t already done so, now is the time to start thinking about your estate planning goals for 2022. By implementing some of these year-end strategies, you can reduce your taxable estate and potentially save on taxes. For more information or assistance with your estate planning needs, contact my office to schedule a free strategy session.


Parenting Tip:

According to the National Safety Council, unintentional injury is the leading cause of death for children in America. If you are hosting a holiday party, be sure to have proper supervision in place. This will help prevent accidental injuries to your children while they are being entertained at the party by their guests.