Time is Running Out

There are just twelve business days remaining in December. If you are realistic about the number of days remaining to transact actual business, it is more like eight days. Use these eight days wisely!

shallow focus of clear hourglass
Make the most of the last eight to twelve days of December.

  • Have you considered using the Roth IRA conversion if your taxable income is less than $160,000 (individual) or $320,000 (joint)?? The reason being that the lower 24% tax bracket was expanded in the 2017 tax law to cover taxable income below these levels.
  • By converting a portion of your Traditional IRA Rollover to a Roth IRA (and paying the taxes today on this ordinary income at the 24% rate) the resulting Roth IRA account grows tax FREE, has NO RMDs and qualified withdrawals are tax FREE.
  • Roth IRA conversions must be completed by December 31st and can be done in as few as 3-4 days (or less) by signing a form and submitting it to your financial adviser or investment firm.*
  • The expanded 24% tax bracket is set to expire at the end of 2025, so use this lower bracket while it exists! (The next higher tax bracket is 32%.)
  • Have you maxed out your 401k? You can increase your deferral rate for the last two pay periods of the year and beef up your 2019 contributions! Remember to consider the after-tax Roth 401k as well as the pre-tax traditional 401k.
  • Have you paid your 4Q Estimated Taxes yet? If you believe your compensation in 2019 was higher than 2018 or if you switched jobs and received a bonus you may want to talk with your CPA this week about paying a higher amount in 4Q estimated taxes to make April 15th more predictable (or preserve your refund if you count on one).
  • These 4Q estimated payments are not due until January 15th but can be paid in 2019.*
  • Do you have an Inherited IRA? A required minimum distribution (RMD) must be taken annually by December 31st, starting the year after the original account owner died – and in some cases starting the YEAR the account owner died.

At this time of year tax preparers and CPAs have far more time to talk with you than in January when the time clock starts on tax season. And while you are at it, you can discuss withholding rates – a hot button tax item from 2018.

Make the most of the last eight to twelve days of December. And in case you were wondering: Twelve drummers drumming, Eleven pipers piping, Ten lords a leaping, Nine ladies dancing, Eight maids a milking… and a Partridge in a pear tree!

*Consult with your CPA for all tax advice.


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