Year-End Tax Planning
Maybe it is just me, but it feels like 2025 has flown by. The market has had its ups and downs but has managed to post double-digit gains so far across the Dow 30, S&P 500, and NASDAQ. Let’s talk about something everyone can agree to dislike—taxes. Most people want to avoid paying taxes but don’t do enough to actually lower their tax bill. While I’m not licensed to give tax advice, I can certainly provide some helpful tips to discuss with your CPA.
High vs. Low Tax Year
It is not uncommon to have an unusual tax year due to a loss of income, the sale of a business, property, or other assets. During those years, there are several ways to reduce your tax burden—either now or in the future. In a high-tax year, consider the following:
Donor Advised Fund (DAF)
If you sold a business, property, valuable horse, or other valuable asset, it may be wise to consider a DAF. The way a DAF works is simple. Once created, it can be funded with any amount the owner chooses. Anything that goes into a DAF is tax deductible. The only catch is that the funds must go to charity. There is no time requirement on when it has to be donated. The funds can be donated in small increments over the owner’s lifetime and even passed down to their children to continue charitable giving.
Fund Retirement Accounts
Contributing to a traditional IRA, SEP IRA, SIMPLE IRA, or 401(k) offers valuable tax benefits. Another benefit is that these funds can grow over time and add to your net worth. Heavy equipment purchases aren’t always the answer. I prefer investments that add to net worth rather than take from it. It is important to remember...
