With the end of the year fast approaching there’s still time to consider some year-end planning before we say goodbye to 2020. It’s important to understand deadlines for the various strategies that you may take into consideration and coordinate them with the overall objective of your personal financial plan. Some of these strategies can potentially reduce your tax burden for the year and even though no one wants to pay more tax than they must, that shouldn’t be the only goal when determining the right thing to do for your particular situation.

For instance, donations to charity may be deductible from your federal taxable income yet the primary goal could be to give back to an important cause, not just to reduce your taxes. It’s also certainly a nice thing to do, however, it’s just as important to “give” within your means as it is to “spend” within your means.

With that in mind, below is a list with a brief description of the strategies you may want to think about and discuss with your accountant and/or financial planner.

$300 above-the-line tax deduction for cash gifts to a 501(c)3 charitable organization

As part of the CARES Act that was passed in April, lawmakers updated current tax law (for 2020 only) to make these gifts deductible from federal income tax regardless of whether you itemize your deductions.

100% tax deduction for cash gifts to a 501(c)3 charitable organization

Also as part of the CARES Act, lawmakers increased the tax deduction for cash gifts to charity from 60% of Adjusted Gross Income (AGI) to 100% for 2020 only.

Qualified Charitable Distribution from qualified retirement accounts for individuals over age 70½

Even though the age to begin Required Minimum Distributions was increased to age 72, the age at which you may make Qualified Charitable Distributions directly to a 501(c)3 charity remained age 70½.

If you’re already making regular donations to charity you may consider talking to your accountant about doing direct gifts from your IRA instead of non-retirement assets, especially if you’re not itemizing your deductions.

529 College Savings Accounts

Some states provide a state income tax deduction for contributions to their 529 college savings plans for state residents. Ohio, for instance, provides a state income tax deduction up to $4,000 per child for contributions made by Dec. 31. Contributions made over that amount will carry forward for use in future years.

Checkout www.collegesavings.org for more information on 529 plans.

Employer Sponsored Retirement Plan contributions

Deferrals into your employer’s retirement plan (401(k), 403(b), etc) are done through payroll and thus are calendar year contributions.

Take a look at your last paystub to determine if you’re on track to contribute as much as you planned for the year. For instance, if you’re over age 50 the maximum contribution is $26,000 for 2020 so this would be your last chance to update your deferral before the end of the year.

Review your taxable investments for capital gains and losses

If you have non-retirement investments, you should review your accounts for realized and unrealized gains and losses. If you have a net realized gain you could potentially offset some/all of the gain with any unrealized losses in the account.

You may also deduct up to $3,000 of net realized loss on your tax return depending on how you file your taxes. Any realized losses over that amount are carried forward into future years.

Keep in mind the 30-day wash sale rules that could negate realized losses: www.fidelity.com/learning-center/personal-finance/wash-sales-rules-tax.

Roth IRA Conversions

When you convert Traditional IRA assets that you received a tax deduction for when making the contribution to a Roth IRA you pay income tax on the total amount in the year of the conversion.

It can make sense in certain situations to implement this strategy even though it means paying extra tax. For instance, if your taxable income is much lower this year you can take advantage of the lower tax bracket by doing a conversion.

Again, remember that these strategies should be considered along with your overall financial plan and tax considerations should be confirmed with your accountant.