9 Smart Tax Strategies to Wrap Up 2023

December 27, 2023

9 Smart Tax Strategies to Wrap Up 2023

As 2023 comes to an end, it is time to start thinking about tax season. Although paying annual taxes is no one’s favorite thing to do, there are some tips and tricks that could help ease the process. Here are nine smart tax strategies to consider as we wrap up 2023:

1. Make Tax-Deductible Retirement and Health Savings

As 2024 approaches, it is important to remember the IRS will begin accepting tax returns starting Jan. 23, 2024. All employers must mail their W-2 to their employees by Jan. 31 and Federal tax returns and payments will be due by April 15. This is also the deadline for filing for extensions.

One year-end tax strategy is to make tax-deductible payments to retirement accounts and health savings accounts. Keep in mind that the deadline for making employer-sponsored 401(k) contributions is Dec. 31. Tax-deductible contributions are limited to $22,500 this year. An additional $7,500 can be made by workers over age 50 in “catch-up contributions.

”Health savings accounts can be contributed up until tax day. Taxpayers with a qualified high-deductible family health insurance plan can deduct up to $7,750 in contributions and Individuals with self-only coverage can deduct $3,850. There is also a catch-up contribution available for health savings accounts, allowing those aged 55 and older to contribute an extra $1,000.

2. Account for Required Minimum Distributions

After reaching age 73, most retirees with a traditional 401(k) or individual retirement account will be required to take a minimum annual distribution front the account. If you have a large retirement account balance, this may be a lot of money that you will be receiving and could result in an additional large tax bill. If you do not take out an RMD, you may be faced with up to a 25% penalty. Accounting for RMDs ahead of time could save you a lot of money.

3. Convert from Traditional Accounts to Roth IRAs

Traditional individual retirement accounts are taxed during retirement. Luckily, this money can be transferred over to a Roth IRA account. These accounts are tax-free and do not have a required minimum annual distribution. Taxes will only have to be paid on the converted amount. Additionally, this is a great way to stay ahead of the game if taxes do rise in the upcoming years.

4. Start Planning for the Future with a 529 Plan

For those further from retirement age, there is another plan that can be helpful to invest in — 529 plans. This type of plan is perfect for families with children who wish to prepare for college and reduce state income taxes in 2024. These work similarly to Roth IRAs in that there it can be used for qualified education expenses as needed and the money growing within it does not require taxes to be paid on it.

For state-sponsored plans, there are typically state income tax deductions for contributions made. There are also many states that allow for deductions to contributions made to 529 plans in other states.

5. Avoid Mutual Funds in Taxable Accounts

While most of this list includes things to do, this strategy is actually something to avoid. To avoid unintentional bills for year-end dividends, avoid purchasing mutual fund shares in taxable accounts. Sometimes this can lead to taxes being owed for profits the shareholder did not even receive. It is always best to discuss your decisions with a broker ahead of time to make sure you are making the wisest decision.

6. Offset Capital Gains Taxes from Stocks

Investing in stocks has its ups and downs. If you had stocks this year and suffered a loss, you may want to try ”tax-loss harvesting.” This is where you sell your losses to offset capital gains taxes that will be owed on the successful stocks you have. Those with excess losses can deduct up to $3,000 net losses from their annual income. Just be careful not to disqualify yourself from your deduction by purchasing the same or similar stock within 30 days of the sale.

7. Sell Successful Stocks to Minimize Taxes on Future Gains

If your stocks have shown significant success, this may be the time to sell them. For those in the 10% and 12% tax brackets, the capital gains tax owed may be zero. If you want to repurchase those same stocks later, you can do so. This will reset the basis and minimize the amount of tax required to be paid on future gains.

8. Try the Cryptocurrency Loophole

While there may be some issues selling stocks for harvesting losses with stocks, there are different rules for cryptocurrency. One way is to sell cryptocurrencies for a loss and then immediately buy into the same one. This will not impact the ability to deduct the loss. These losses can be used to offset capital gains and annual income taxes.

9. Talk to a Professional

The best course of action before making any tax decisions is to speak with a professional in the field. They will be able to direct you through making the best financial decisions. As 2023 comes to an end, consider scheduling a time with a tax advisor before the busy season next year. They will be able to discuss your options and eligibility requirements, as well as answer any additional questions you may have.


There are a lot of things to keep in mind as you begin to think about taxes for 2024. There are strategies for people of all different ages and income levels. As tax season approaches, safeguarding your sensitive financial data is paramount. With cyber threats on the rise, trust iLock360 to shield your tax information from potential breaches. Ensure your financial security and peace of mind by choosing iLock360’s top-tier cybersecurity solutions today. Click here to learn more about iLOCK360.

Get identity protection

There’s an iLOCK360 plan to fit your unique needs

View plans →

Connect with Us

Related Posts



Submit a Comment

Your email address will not be published. Required fields are marked *