7 Year-End Strategies to Save You Money On Taxes

Some extra saving, some stock moves, some charitable giving … these strategies all can add up to tax savings for many people. But the clock is ticking.

In the novel David Copperfield, Charles Dickens called procrastination the “thief of time.”

Procrastination also can cost you plenty of cold hard cash when it comes to your income taxes.

There are several strategies that can help you reduce your taxes this year and in the future — but you must move quickly. You’ll have to beat certain deadlines, or the opportunities will disappear.

1. Maximize your savings.

Consider putting more money into your individual retirement accounts, Roth IRAs, 401(k)s, 403(b)s, etc. Saving any amount toward your retirement is smart — but if you can, consider contributing the maximum allowed.

  • The limit for tax-deferred retirement accounts (such as 401(k), 401(b), most 457 plans and the Thrift Savings Plan) is $18,000 for 2017, and you have until Dec. 31 to get the money in there. Savers over 50 also can make a catch-up contribution of $6,000 for a total of $24,000.
  • No 401(k)? You can contribute up to $5,500 ($6,500 if you’re 50 or older) to a traditional IRA and/or Roth IRA until April 15, 2018, and have it count toward your 2017 taxes. The Roth won’t reduce your current tax bill, but earnings and withdrawals are typically income tax-free — something you’ll love in the future.
  • Two other options are available for those who are self-employed: a SEP IRA and a Solo 401(k). Each has a maximum contribution amount of $54,000, or $60,000 for those over 50.

2. Look at your losses.

Although 2017 was a great year for most investors, many still have stocks, exchange traded funds (ETFs) or mutual funds that experienced a capital loss. If these losses are greater than your capital gains, you may be able to deduct them from your ordinary income — up to $3,000. If you can’t write off all your stock losses this year, you can carry over the loss to future tax years. (There are rules for making these calculations, so be sure to consult your tax professional.)

3. Think about deferring some income.

If you’re concerned because you’re on the cusp of entering the next tax bracket this year, or if you expect your income to be less next year, consider deferring a paycheck or other income to minimize your current liability.

4. Accelerate your deductions.

You also may want to look at paying some deductible expenses this year rather than next to temporarily lower your income. If you use a credit card to pay one or more of next year’s bills today, you can deduct the expenses in 2017, then pay off that amount next year. (This would work for medical or dental expenses, for example, or if you’re planning to add solar panels to your home.) If you’re retired or self-employed, prepaying the balance of your estimated state tax liability this year rather than waiting for January would secure the deduction for this current tax year.

5. Consider donating appreciated securities to charity.

Most publicly traded securities with unrealized long‐term gains can be donated to a public charity (501(c)(3). You can then claim the fair market value as an itemized deduction on your federal tax return — up to 30% of your adjusted gross income. You won’t owe capital gains taxes because the securities were donated, not sold. If you wish to make a larger contribution ($5,000 or more), look at establishing a donor-advised fund. Most mutual fund companies offer this charitable-giving program.

6. Put off that mutual fund purchase.

Here’s one strategy where a little delay could pay off. Most mutual funds distribute capital gains at the end of the year, and if the fund is in a non-qualified account (meaning a tax-deferred account such as a 401(k) or 403(b) plan), that money is taxable to you regardless of when you made the purchase. If you buy the mutual fund after the capital gains distribution, you’ll not only avoid the federal income tax, but the price will usually drop, so you could get it for less.

7. Make financial gifts.

This tip won’t help you reduce taxes, but it may help shield your money from federal estate and gift taxes. For 2017, federal estate taxes kick in for individuals with estates exceeding $5.49 million. You can give up to $14,000 in non-taxable gifts this year to as many people as you like and can afford. And the gifts don’t count toward your lifetime exemption from this gift tax.

Take the next step now.

These are just a few of the year-end strategies you can use to manage your tax liability. Don’t miss out by waiting until the new year to think about your tax return. Talk to your financial adviser and tax professional as soon as possible about how you can reduce your taxes in 2017.

Kim Franke-Folstad contributed to this article.

About the Author

Michael Woloshin, Investment Adviser Representative

Founder and managing director, Woloshin Investment Management

Michael Woloshin is an Investment Adviser Representative, insurance professional and the founder and managing director of Woloshin Investment Management. His priority is helping those who are about to retire or who already have retired pursue their financial independence utilizing customized income strategies. Woloshin has over 35 years of experience advising clients.

Most Popular

Your Guide to Roth Conversions
Special Report
Tax Breaks

Your Guide to Roth Conversions

A Kiplinger Special Report
February 25, 2021
The 25 Cheapest U.S. Cities to Live In
places to live

The 25 Cheapest U.S. Cities to Live In

Take a look at our list of American cities with the lowest costs of living. Is one of the cheapest cities in the U.S. right for you?
October 13, 2021
Gen X: How to Make Sure Your Future Self Remains Funded
personal finance

Gen X: How to Make Sure Your Future Self Remains Funded

If you’re a Gen Xer, like me, now might be the right time to talk to a financial professional to learn more about how to adjust your retirement planni…
October 20, 2021


Child Tax Credit Payment Schedule for the Rest of 2021
Tax Breaks

Child Tax Credit Payment Schedule for the Rest of 2021

The IRS has already sent four batches of monthly child tax credit payments. Here's when you can expect the remaining payments.
October 27, 2021
Next Child Tax Credit Payment Opt-Out Deadline is November 1
Tax Breaks

Next Child Tax Credit Payment Opt-Out Deadline is November 1

The due date for opting out of the November 15 monthly child credit payments is right around the corner. Why some people don't want to miss that deadl…
October 27, 2021
Spending Like It’s 2019
Smart Buying

Spending Like It’s 2019

I've found that setting spending targets and tracking my finances with budgeting apps are convenient ways to stay on top of my cash flow.
October 27, 2021
Boost Your Retirement Savings for 2022
Financial Planning

Boost Your Retirement Savings for 2022

If you were self-employed or had a side hustle in 2021, you can save even more in a tax-advantaged account.
October 26, 2021