9 Year-End Tax Planning Questions to Ponder

John Robinson |

Financial Planning with Tax Law Changes in Mind

Tax planning this year is so unusual because of a slew of one-time tax law changes.  At the same time, depending upon a couple of elections in Georgia, there seems to be a reasonable likelihood that there may be significant tax law changes as early as 2021.  With just six weeks left in 2020, the time is now to meet with your CPA for 2020 tax optimization.  I am happy to sit in on those meetings and/or to discuss potential opportunities with you individually.  In the meantime, here are nine questions to ponder:

  • Even though required minimum distributions were waived for 2020, does it still make sense to take IRA distributions to fill the 22% or 24% marginal income tax brackets?
  • If you are over 70 ½, does it make sense to make qualified charitable distributions from your IRA (subject to $100,000 limit) instead of regular tax deductible charitable contributions?
  • If you are over 59 ½, does it make sense to take money out of pre-tax retirement accounts (e.g., IRA, 401(k), 403(b)) to fill up the 22% or 24% marginal brackets if you believe marginal rates may be higher in the near future?
  • Should you realize capital gains in 2020 in anticipation of higher rates in the near future?
  • Should you gift appreciated stocks to children (or parents) who are in lower marginal income tax rates?
  • Should you consult with your estate planning attorney about the wisdom of making large gifts before year end in anticipation of significantly lower federal estate tax limits?
  • If you have cash earning 0% in IRAs or qualified retirement accounts and you have debt obligations with interest rates north of 3-4%, do you qualify for a COVID-Related Distribution to pay down the debt?
  • Are you going to take advantage of the new $300 above-the-line charitable deduction?
  • Should you consider a full or partial Roth conversion before year-end?


Related Reading:

Election 2020: Year-end tax strategy hedges for clients (Financial Planning)

2020 Year-End Tax Planning Tips for Businesses and Individuals (CPA Practice Advisor)

The Impacts of COVID-19 on Year-end Individual Tax Planning Strategies (Untracht Early)

7 Year-End Tax Planning Strategies for Businesses (CLA)

Early distributions from retirement plans related to COVID-19 (The Tax Adviser)


John H. Robinson is the founder of Financial Planning Hawaii and a co-founder of software maker, Nest Egg Guru 

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Fee-only financial planning services are provided through Financial Planning Hawaii, Inc, a separate Registered Investment Advisory firm. Financial Planning Hawaii does not take custody of client assets nor do its advisers take discretionary authority over client accounts. 

The information contained herein is general in nature. Neither Financial Planning Hawaii nor J.W. Cole provides client-specific tax or legal advice. All readers should consult with their tax and/or legal advisors for such guidance in advance of making investment or financial planning decisions with tax or legal implications.