As 2021 draws to a close, here are some tax-planning tips and a reminder of upcoming tax-related deadlines:

1. Fourth-quarter tax estimates are due soon. To avoid penalties, be sure your payment is postmarked no later than January 15, 2022.

2. Review your pay stubs. If cash flow allows, make sure to maximize contributions to your tax-qualified accounts before year-end (e.g., 401(k)/403(b)).

3. Consider filling up lower tax brackets. A great way to get this done is with a Roth conversion, which must be completed by December 31st.

4. Maximize itemized deductions. Consider the timing of state/local tax payments, medical expenses, and/or charitable contributions to bring itemized deductions above the standard deduction ($12,550 for singles and $25,100 for marrieds).

5. Maximize charitable giving tax savings.

   • Take advantage of an easing of charitable deduction tax rules, including a $300 above-the-line deduction and removal of the 60%-of-Adjusted Gross Income (AGI) limit, both for cash donations only.

   • Contribute to a Donor-Advised Fund and receive an immediate tax deduction while maintaining the ability to distribute funds to a preferred charity later.

   • Use a Qualified Charitable Contribution (QCD) to contribute directly to a charity out of an IRA (a QCD is only available to IRA owners over age 70.5).

   • Donate shares of appreciated securities (stocks, bonds, mutual funds) to receive a tax deduction and avoid capital gains tax.

At SoundView, we evaluate your personal tax situation and let you know if any tax planning strategies should be considered before year-end. Your input in this process is crucial, so please let us know if there have been any major life changes that might impact your tax situation. We make every effort to coordinate this planning with your tax preparer. We want their input prior to implementation and work hard to ensure they have everything needed to file your return in the coming year.