It’s almost that time of the year again! It’s almost – List Season!! It’s not so charming when you put it that way, huh? Christmas is coming up fast and assuming none of y’all actually make Santa’s Naughty List (we’ve got our eye on a few of you – you know who you are), then most of you have Christmas presents to purchase between now and December 24th at 11:59 pm. It’s surprising just how full the Walmart parking lot is the day before Christmas, don’t ya think?
You’ve got the obligatory list of relatives, friends and neighbors to buy for. You’ve also got the list of things to cook. I wanna know who’s making the cheese pudding because I’m inviting myself! There’s a list for the actual dinners: turkey, stuffing, ham, dinner rolls, sweet potato souffle (of which every year wires get crossed and two are made, one with the marshmallow topping and one with the brown sugar crunchy thingees). There’s green bean casserole and cranberry sauce. And pies galore! Chocolate pie and pumpkin pie and Atlantic Beach Icebox Lemon Pie – Nilla Wafer crust only – get that cracker crust away from me! Then comes the list of the hors d’oeuvres: the cheese ball with bizarre array of crackers, the 7-layer taco drip with Frito Scoops, the green pepper jelly hats I call them, and so on.
Then you’ve got the list of events to attend. And it really starts with Halloween now and rolls on through Thanksgiving all the way to Christmas. School Thanksgiving and Christmas programs for kids and grandkids, Candlelighting, Handel’s Messiah and children’s choirs at church, work parties, Fall Sports Season Championships and practices for Winter Sports, neighborhood parties, get-togethers with your friends and either travel to your relatives on the actual celebration of Our Lord’s birth, or a massive, frantic inside-outside clean-up the day before those relatives descend upon you. I’m exhausted before it even starts …
Lots of things to do and so very little time. So little time in fact you forget to take your RMDs for 2025 and incur a 25% penalty for what you were supposed to take. I’m sorry, did you say that was $40,000? You owe $10,000 in penalties. That might be worth a proactive call to your advisor. Help us coordinate with you to get those dollars to where they need to go before it’s too late.
So very little time to set up your Qualified Charitable Donations (QCDs) if you haven’t already. Have you made a pledge to your church that you need to honor? Send them a dollar on the dollar, not $0.70 on the dollar while reducing the taxable income you were going to have to take and didn’t want. It costs you less to give the same amount this way, which could help you make an even bigger gift if it is in your mind and heart to do so.
So very little time to engage with your advisor on tax-loss harvesting to sell some losers so maybe you don’t have to pay capital gains tax on the winners you’ve already sold.
So very little time to win the lesser-known game of tax-gain harvesting. It’s very possible now with the 0% capital gains brackets particularly for Married Filing Jointly going all the way up to $96,7001 that there may be some opportunities to sell stocks and funds with no capital gains tax if you can keep your (ordinary income + capital gains – standard deduction) under that threshold. If you sell more and go over that threshold, you can still experience a very small tax on the overage. If you have what we call a legacy stock, something that you’ve had forever and wanted to sell but couldn’t because of the capital gain, then give us a call if your income is anywhere near this range, as you may have an opportunity here to finally pocket that gain and move on to greener pastures!
So very little time to execute a Roth conversion from your IRAs that are so neatly teed up for the government to whack with taxes in the future, which we believe are only going to go up and increase your burden later. Convert now so you can smile at the news when it happens, because it will affect you less financially the more you have in a tax-free account.
So very little time that we get on this Earth and we want you to be able to share it with your loved ones when you see them over the next couple of months for the holidays. We want you to be able to be with them and not be running a last-minute play with these silly little financial things that save you lots of money but pale in comparison to the limited time we’re given to be with those we love.
I hate giving good people homework, but better I do it now than when your relatives are at the front door with the pecan pies and presents in hand! Let’s go ahead and take care of your 2025 Financial Lists for you. Let’s be proactive now, here in October until early November, and get ahead of the chaos that is coming. This is your annual reminder we are entering the Tax-Planning Red Zone. Let’s score while we still can in 2025. So call us soon and we’ll have a Pre-Holiday Tax Chat. If you listen to us, we’ll change your financial world …
Sincerely,
Scott Wright
Portfolio Manager
The Wealth Training Academy
Sources:
1Using Tax Brackets to Manage Your Taxable Income | Charles Schwab
