Skip to headerSkip to main contentSkip to footer
Get our Free E-newslettersGet our Free E-newsletters
Kiplinger logoLink to homepage
Get our Free E-newslettersGet our Free E-newsletters
Subscribe to Kiplinger
Subscribe to Kiplinger
Save up to 76%
Subscribe
Subscribe to Kiplinger
  • Store
  • Home
  • Investing
  • Retirement
  • Taxes
  • Personal Finance
  • Your Business
  • Wealth Creation
  • More
    • Podcasts
    • Economic Outlooks
    • Tools
  • My Kiplinger
    • Kiplinger's Personal Finance Magazine
    • The Kiplinger Letter
    • The Kiplinger Tax Letter
    • Kiplinger's Investing for Income
    • Kiplinger's Retirement Report
    • Store
    • Manage My E-Newsletters
    • My Subscriptions
  • Home
  • taxes
taxes

4 End-of-the-Year Tax-Savings Tasks to Complete Before Thanksgiving

Waiting until December to make charitable donations or start moving money between various accounts to save money on 2017 taxes can present several obstacles.

by: Lisa Brown, CFP®, CIMA®
October 17, 2017

Getty Images

Waiting until December to make charitable donations or start moving money between various accounts to save money on 2017 taxes can present several obstacles. Transactions at investment firms can get delayed in December as people barrage these firms with such requests as year-end stock gifts to charities, and some non-profit organizations can also take weeks to process any major gifts. Employers can also get bombarded with year-end activity like last-minute payroll or tax-withholding change requests.

Instead, set aside time in October and November to take advantage of four tips that can save you hundreds, possibly thousands of dollars on your 2017 taxes. For most people, these transactions will involve other parties, which is the reason to move forward now. Here they are:

Written by Lisa Brown, a partner and wealth adviser at Brightworth, an Atlanta wealth management firm with $3 billion in assets under management, serving over 1,200 families in 48 states. She works with high net worth families in investment management, executive compensation, retirement transition and estate planning. Brown is a Certified Financial Planner™ and an Accredited Estate Planner.

 

1 of 4

1. Donate Stock that has Appreciated in Value.

Getty Images

With the stock market hitting record highs in 2017, people with investments in stocks, bonds and other securities can donate those that have appreciated in value that they’ve held for at least one year, resulting in significant income tax savings. Donating stock saves even more taxes than donating cash, because there is no capital gains tax when appreciated securities are given to a non-profit.

Here’s an example of how this works for someone in the highest federal tax bracket who lives in a state with a 6% state income tax:

  • By making a $10,000 cash donation, a person can save $4,500 in taxes.
  • However, making a $10,000 donation in stock that has doubled in value saves $5,990 in taxes, including $1,490 in future capital gains taxes.

For people who have never donated stock to charities, and don’t know which charities to support, ask your financial adviser about setting up a donor-advised fund.

This charitable giving tool enables donors to make a charitable contribution, receive an immediate tax benefit and then give away this money to their favorite charities over time.

For example, a person can give $20,000 of cash or appreciated securities this year to a donor advised fund and spread out the distributions to charities over several years. But by setting up the fund this year, they can take the $20,000 deduction on their 2017 federal and state income tax returns.

2 of 4

2. Increase Taxes Withheld from Your Paycheck.

Getty Images

If it appears you will need to pay additional taxes for 2017 when you file in April, increase the amount deducted from each paycheck right now by filing changes on a W-4 form. Waiting until December to make that adjustment won’t make much of a dent in your April tax bill, so handle this matter as soon as possible, and reduce the risk of underpayment tax penalties.

3 of 4

3. Increase 401(k) Contributions.

Getty Images

Everyone with a 401(k) retirement account is allowed to contribute up to $18,000 annually if under age 50, and $24,000 if 50 and older. Saving more money now can mean that less of your 2017 income is subject to taxes.

But waiting until December likely results in only one or two pay periods for any increased contributions to take effect — and that’s if your request is processed quickly. In addition, most people are spending more money than usual in December on gifts, travel and other items. They find it challenging to set aside more money for retirement. So, call your payroll department or go to the website of your employer’s 401(k) plan administrator and increase your 401(k) savings now.

4 of 4

4. Top Off Your Health Savings Account.

Getty Images

While participants in a high-deductible medical plan can contribute money to their HSA through mid-April and receive a deduction on their 2017 tax return, I advise my clients to make their contributions by Dec. 31. This helps ensure a “clean” 5498 tax form from their Health Savings Account provider, as contributions made in Q1 2018 won’t appear on the 5498 tax form that’s mailed out around February. Contributions made in 2018’s first quarter, but effective for the prior year, will show up on form 5498-SA. But that form is sent in May, a month after you likely filed your tax return. Making all of your 2017 HSA contributions by Dec. 31 also means one less thing to remember to tell your accountant before your tax return is filed.

This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

Contributors

Lisa Brown, CFP®, CIMA®

Partner and Wealth Advisor, Brightworth

Lisa Brown, CFP®, CIMA®, is author of "Girl Talk, Money Talk, The Smart Girl's Guide to Money After College." She is the Chief Strategy Officer for corporate professionals and executives at wealth management firm Brightworth in Atlanta. Advising busy corporate executives on their finances for nearly 20 years has been her passion inside the office. Outside the office she's an avid runner and supporter of charitable causes focused on homeless children and their families.

  • family savings
  • how to save money
  • tax planning
  • retirement planning
  • taxes
  • tax filing
  • wealth management
Share via EmailShare on FacebookShare on TwitterShare on LinkedIn

Recommended

10 New Year’s Financial To Do’s (You’ll Feel Great When You Check Them Off)
retirement planning

10 New Year’s Financial To Do’s (You’ll Feel Great When You Check Them Off)

Once you run through this checklist, you’ll be in great shape for a prosperous and organized new year.
January 18, 2021
How to Handle an IRS Audit of Your Tax Return
tax returns

How to Handle an IRS Audit of Your Tax Return

Don't panic! Keys to success include being well prepared, establishing credibility right from the start, and keeping your wits about you.
January 15, 2021
When Can You File Your Taxes This Year?
tax filing

When Can You File Your Taxes This Year?

If you're an early bird when it comes to filing your tax return, you'll have to wait a little longer this year before the IRS will accept your return.
January 15, 2021
12 IRS Audit Red Flags for Retirees
retirement

12 IRS Audit Red Flags for Retirees

Seniors Beware: Your actions can increase the chances of the IRS giving your tax return a closer look.
January 14, 2021

Most Popular

Where's My Stimulus Check? Use the IRS's "Get My Payment" Portal to Get an Answer
Coronavirus and Your Money

Where's My Stimulus Check? Use the IRS's "Get My Payment" Portal to Get an Answer

The IRS has an online tool that lets you track the status of your second stimulus check.
January 18, 2021
Biden Calls for $1,400 Payments as Part of $1.9 Trillion Relief Package
Coronavirus and Your Money

Biden Calls for $1,400 Payments as Part of $1.9 Trillion Relief Package

Under Biden's plan for a third stimulus check, the $600 second-round stimulus checks would be increased to $2,000.
January 14, 2021
When Could We Get a Third Stimulus Check?
Coronavirus and Your Money

When Could We Get a Third Stimulus Check?

President-elect Joe Biden and others in Congress are pushing for a third-round of stimulus checks, but it might be a while before we get them.
January 18, 2021
  • Customer Service
  • About Us
  • Advertise With Us (PDF)
  • Privacy Policy
  • Cookie Policy
  • Kiplinger Careers
  • Accessibility
  • Privacy Preferences

Subscribe to Kiplinger's Personal Finance

Be a smarter, better informed investor.
Save up to 76%Subscribe to Kiplinger's Personal Finance
Dennis Publishing Ltd logoLink to Dennis Publishing Ltd website
Do Not Sell My Information

The Kiplinger Washington Editors, Inc., is part of the Dennis Publishing Ltd. Group.
All Contents © 2021, The Kiplinger Washington Editors

Follow us on InstagramFollow us on FacebookFollow us on TwitterConnect on LinkedInConnect on YouTube