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Three Ways to Avoid the Year-End Tax Rush in 2024

By Holly SwanExecutive Director, Advisor Institute

How can you and your team avoid the year-end tax planning rush in 2024 and beyond? Explore reframing three areas from year-end opportunities to year-round strategies—tax-loss harvesting, charitable giving and annual gifting exclusions.

Tax-loss Harvesting

December has historically been one of the best-performing months for the markets, making it a less than ideal time to go hunting for losses.1 Consider how using a systematic tax-loss harvesting strategy year-round can result in a better tax experience for your clients. 2

Remember that capital losses can be collected and set aside for use against future gains in addition to ones recognized in the current tax year. These gains may be in client portfolios or on assets held outside of these accounts. For example, the sale of a business or diversification of a concentrated position in employer stock.

Charitable Giving

Leaving charitable contributions to year-end can often lead to donations made via cash or check. While doing that's not a wrong way to give, there are more tax efficient options like qualified charitable distributions and contributions of appreciated stock.

Consider having charitable giving conversations with your clients earlier in the year to allow for proactive planning. The quieter summer months can be an ideal time to discuss philanthropy.

Annual Exclusion Gifting

Clients who anticipate having a taxable estate will often use annual exclusion gifts as a tax-free way to pass wealth on to the next generation. Encourage clients to avoid the year-end rush by making gifts in the first quarter or by gifting to each recipient on their birthday. Giving during slower times of the year will allow clients to have meaningful conversations with recipients about their hopes for the use of the gifted funds.

Bottom Line: A year-round approach to tax planning will take some of the pressure off your team at year-end while allowing for more thoughtful tax planning for your clients.