Global View Investment Blog

Year-Round Tax Planning Tips for Lasting Financial Health

If you’ve recently written a check to the IRS for taxes from the previous year, you’re probably looking for ways to reduce the size of that check next year. After all, no one wants to pay more taxes than are necessary.

Today’s blog will provide several tax planning strategies you can deploy during the remainder of this year to help prepare you for April 15th next year. By implementing smart tax strategies today, not only can your filing process go smoother, but you can also reduce your tax liabilities.

Working with a Greenville fiduciary financial advisor, like Global View Investment Advisors, can help you build an effective tax planning strategy so you are confident you have a tax-efficient plan.


Four Tax Planning Strategies for 2024 and Beyond

While countless tax planning and tax-efficient investment strategies are available, we will focus on four of the most common and easy-to-implement strategies.

  1. Since company-sponsored pension plans are mostly a thing of the past, contributing to tax-advantaged accounts, such as IRAs and 401(k)s, is the primary vehicle for people to save for retirement. Contributions to these accounts can often be deducted from current income, lowering your taxable income in the year of the contributions. 

Additionally, the investments in these accounts grow tax-deferred, meaning you don't pay taxes on capital gains, dividends, or interest. You only pay taxes on withdrawals during retirement when your tax bracket could be lower. 

For 2024, the contribution limits for these accounts are as follows:

  • IRA Contribution Limits: The contribution limit for IRAs in 2024 remains unchanged at $6,000 for individuals under 50, with an additional catch-up contribution of $1,000 for those 50 and older, allowing a total of $7,000.
  • 401(k) Contribution Limits: The 401(k) contribution limits in 2024 have been increased to $22,500 for individuals under 50. Those 50 and older can make an additional catch-up contribution of $7,500, bringing their total allowable contribution to $30,000.


Watch our managing partner, Joe Hines, discuss how to avoid three retirement planning mistakes.


Global View Insights: Maximizing your contributions to 401(ks) and IRAs is one of the smartest things you can do for yourself. We also recommend reviewing your allocations with an experienced CFP® in Greenville to ensure you are optimizing your retirement funds and are not taking the right amounts of risk. 


2. Tax loss harvesting is a tax planning strategy, for personal accounts, that is used to sell off investments that have experienced losses to offset gains in other assets that are being sold. The goal is to lower the overall tax liability associated with your investments. 

When an asset in your portfolio has decreased in value, it can be sold at a loss, which can then be used to offset taxable gains from other investments. If the losses exceed the gains, up to $3,000 (or $1,500 if married filing separately) can be used to offset ordinary income on federal taxes. Unused losses can be carried over to future years.

This strategic investment approach requires careful consideration of the "wash sale rule," which prohibits investors from claiming a tax deduction for a security sold at a loss if a substantially identical security is purchased within 30 days before or after the sale.

Global View Insights: Tax loss harvesting makes your portfolio more tax-efficient. Regularly reviewing and adjusting your portfolio when there are losses can reduce your tax bill, allowing you to reinvest those savings into other opportunities with better potential. Consider working with a Greenville financial advisor specializing in tax loss harvesting strategies.


3. Long-term capital gains are created when you sell an asset you’ve held for over a year. The key advantage of these gains is their favorable tax treatment compared to short-term gains, which are taxed as ordinary income. 

This preferential rate can enhance your net returns in personal accounts: sales price minus capital gains tax equals net return.

Recognizing long-term capital gains should be a strategic component of your tax planning process.

Global View Insights: Understanding and applying long-term capital gains to your investment strategy can produce considerable tax savings while helping you realize your financial goals more efficiently.


4. Another strategy that can be very useful for your long-term tax planning efforts is using Roth IRAs. These tax-advantaged individual retirement accounts offer tax-free growth and tax-free withdrawals in retirement under certain conditions. 

Unlike Traditional IRAs, where contributions are tax-deductible and withdrawals are taxable, Roth IRAs are the opposite. 

  • Contributions are taxable.
  • Distributions after 59 ½ and once the account has been open for five years are tax-free. Assets are tax-free in both types of accounts.

This feature makes Roth IRAs a powerful tool for tax planning, especially for those who anticipate being in a higher tax bracket in retirement or prefer the certainty of tax-free withdrawals in their retirement years. Here’s how it works:

You can transfer funds from a traditional IRA to a Roth IRA, known as a Roth conversion. The amount converted is added to your income for the year and taxed at your current income tax rate. 

For example, if you convert $200,000 from a traditional IRA to a Roth IRA, that $200,000 is considered taxable income for the year of the conversion. 

If you're in the 24% tax bracket, you might owe $48,000 in taxes on the conversion ($200,000 * 24%). However, once in the Roth IRA, those funds can grow tax-free, and qualified withdrawals will be tax-free, offering significant long-term tax benefits.


Global View Insights: Roth IRAs can be powerful tools for tax planning, especially if you anticipate being in a higher tax bracket in retirement or prefer the certainty of tax-free withdrawals in your retirement years. 

If you’re ready to take your 2024 tax planning strategies to the next level, we invite you to connect with us.

Adam Wiles

Written by Adam Wiles

Adam is a Partner at Global View. Adam’s primary focus is on investment strategy, retirement planning, risk management, and new client identification. He has extensive experience and training in identifying client’s needs and explaining the solutions that meet those needs. He worked with Merrill Lynch for 2 years prior to joining Global View. Prior to Merrill Lynch, Adam worked 10 years, in several trading capacities, within the Commodity Lumber business.

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