These last-minute actions can further lower your 2023 tax bill

The end of the year is nearing, but experts say there’s still a chance to reduce your 2023 tax bill or increase your refund with a last-minute move.

Dec. 31 is the deadline for many tax savings opportunities, so you have limited time to take action.

Edward Jaström, a certified financial planner and chief planning officer at Heritage Financial Services in Westwood, Mass., says he’s “a little late to being super strategic,” but not yet ready for certain tax strategies. He said there are “low-hanging fruit”.

Here are some last-minute tax moves to consider in 2023.

The S&P 500 neared its all-time high on Dec. 28, but investors may still have the opportunity to recover tax losses to offset investment losses.

“We either sell some bond funds at a loss and buy high-yield individual bonds, or instead “They’re buying other funds.”

“This does not change the overall asset allocation, but it improves tax performance,” Dwyer added.

However, the so-called wash sale rule must be taken into account. This blocks tax deductions if he repurchases “substantially identical” property within 30 days before or after the sale.

Another move, so-called tax gain harvesting, involves selling profitable brokerage account assets when long-term capital gains are 0%.

Tax gain harvesting is an “overlooked strategy,” said Andrew Herzog, CFP, associate wealth advisor at Watchman Group in Plano, Texas.

Taxable income of $44,625 or less for single filers or $89,250 or less for married couples filing jointly may qualify for the 0% tax rate in 2023.

These tax rates are applied to your “taxable income” and are calculated by subtracting the greater of your standard deduction or itemized deductions from your adjusted gross income.

Tax gain harvesting can also be used to sell profitable assets and immediately buy them back to reset the basis or original purchase price and reduce future taxes, Herzog explained.

“But to thread this needle, it’s really important to accurately estimate your income for the year,” he says.

With the end of the year approaching, there is limited time to make charitable contributions and claim deductions in 2023, Justrem said.

There may not be enough time to open and transfer funds to the donor-recommended fund. However, it is possible to transfer assets directly from your bank or brokerage account to a charity if your institution is able to initiate the transfer and the charity accepts the funds by his December 31st date.

“Time is of the essence,” Justrem said.

Of course, you can only claim the charitable tax deduction if you itemize the deduction on your 2023 tax return. The majority of Americans claim a standard deduction of $27,700 for married couples filing jointly and $13,850 for single filers in 2023.

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