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Year End Tax & Financial Planning To-Do's

Updated: Jan 26, 2021

As the year 2020 ends and 2021 begins, it is a great time to think about planning ahead to maximize tax savings and stay on track to meet your personal financial planning goals.

This year ends amidst a global pandemic, a presidential transition, low interest rates, high gift and estate tax exclusions, historically low-income tax rates, and volatile financial markets.

The following checklists will help you to identify important action items to consider as part of your 2020 year-end income and transfer tax planning as well as planning for the future in 2021. As your trusted advisers, we would appreciate the opportunity to talk with you about how these might fit into your unique and personal situation.

Income Tax Planning

  • Remember to send in capital gains and investment income information for the most accurate year-end projection.

  • Harvest capital losses to offset realized gains and rebalance your taxable investment accounts.

  • Consider harvesting any capital gains that can be realized in the 0% tax bracket (available to lower income filers).

  • Review charitable contributions to maximize income tax deductions.

  • Consider that under the CARES Act Individuals have unique opportunities in 2020.

  • Consider donating appreciated assets that have been held for more than one year, rather than cash.

  • Plan for the unique change for IRA and 401(k) required minimum distributions in 2020.

  • Weigh the benefits of converting your Traditional IRA to a Roth IRA to lock in lower tax rates on some of your pre-tax retirement accounts.

  • Maximize your contributions to a retirement plan, SEP IRA (if you are self-employed) and Health Savings Account.

  • Review the timing of income and deductions.

Estate/Gift Tax Planning

  • Make use of annual exclusion gifts ($15,000 per donee, $30,000 married couple) to help save on potential future estate taxes.

  • Capitalize on the unlimited gift exemption for direct payment of tuition and medical expenses.

  • Consider gifting to a 529 plan by year-end if saving for a child's or grandchild's education.

  • Review lifetime gift and GST gifting opportunities to use additional applicable exclusion and exemption amounts.

  • Consider intra-family loans and opportunities to leverage low-interest-rate environment.

  • Revisit grantor retained annuities trusts (GRATs) for use in the current low-interest-rate environment.

Retirement, Investments and Other Planning

  • Let us know about any major changes in your life such as marriages or divorces, births or deaths in the family, job or employment changes, and significant planned expenditures (real estate purchases, college tuition payments, etc.).

  • Update pre-tax and Roth contributions to retirement accounts for 2021.

  • Review your various insurance policies and confirm whether the amount of coverage is still adequate.

  • Review beneficiary designations and update, as necessary.

  • Confirm that you have spent the entire balance in your Flexible Spending Accounts and set 2021 contribution amounts.

  • Review your investment portfolio and target asset allocation. Confirm whether you are within the targeted ranges for each asset class.

  • Review quarterly estimated tax payments and assess any liquidity needs.

  • Evaluate progress towards financial goals.

The decisions you make each year with your personal finances will have a lasting impact. We hope this article has begun to generate some insight to areas of your personal finance that need attention. We are honored to be your trusted advisers and partners. Please contact us when you are ready to talk through year-end planning.

Click to print or download a Tax Planning Checklist for Individuals.

Click to print or download a Tax Planning Checklist for Business Owners.

IMPORTANT DISCLOSURES All written content is for information purposes only. Opinions expressed herein are solely those of RISE Consulting, LLC and our editorial staff. Material presented is believed to be from reliable sources; however, we make no representations as to its accuracy or completeness. All information and ideas should be discussed in detail with your individual adviser prior to implementation. Advisory services are offered by RISE Consulting, LLC a Registered Investment Advisor in the States of Kansas and Missouri. RISE Consulting, LLC may only transact business with residents of those states, or residents of other states where otherwise legally permitted subject to exemption or exclusion from registration requirements. Insurance services are offered by RISE Agency, LLC, an affiliated company. RISE Consulting, LLC and RISE Agency, LLC are not affiliated with or endorsed by the Social Security Administration or any government agency, and are not engaged in

the practice of law.

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