There’s still time to reduce your 2023 tax bill with these last-minute moves

The year-end is quickly approaching, but there’s still a chance to reduce your 2023 tax bill or boost your refund with some last-minute upsets, experts say.

Dec. 31 is the deadline for many tax-saving opportunities, which leaves limited time to take action.

“It’s a crumb late to be super strategic,” but there’s still some “low-hanging fruit” with certain tax strategies, said certified economic planner Edward Jastrem, chief planning officer at Heritage Financial Services in Westwood, Massachusetts.

Here are a few last-minute tax stratagems to consider for 2023.

While the S&P 500 approached a record high on Dec. 28, investors may motionless have opportunities for tax-loss harvesting, which uses investment losses to offset profits.

“We have been double-cross off some bond funds at losses and purchasing either individual bonds with high yields or buying other grants in their place,” said certified financial planner Monica Dwyer, vice president of Harvest Financial Advisors in West Chester, Ohio.

“This doesn’t fluctuate the overall asset allocation but improves the tax performance,” Dwyer added.

However, you need to consider the so-called wash tag sale rule, which blocks the tax write-off if you repurchase a “substantially identical” asset within a 30-day window before or after the jumble sale. 

Another move, so-called tax-gain harvesting, is selling profitable brokerage account assets while in the 0% long-term topping gains bracket.

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

You may qualify for the 0% rate for 2023 with taxable income of $44,625 or less for solitary select filers and $89,250 or less for married couples filing jointly.

These rates apply to your “taxable receipts,” which is calculated by subtracting the greater of the standard or itemized deductions from your adjusted gross income.

You can also use tax-gain take in to sell profitable assets and then immediately repurchase to reset the basis, or original purchase price, to reduce future loads, Herzog explained.

“But it’s very important to have an accurate estimate of income for the year to thread this needle,” he bring up.

With the year-end nearing, there’s limited time to make a 2023 charitable alms and claim the deduction, according to Jastrem.

There’s likely not enough time to open and send money to a donor-advised pelf. But you could transfer assets directly to a charity from a bank account or brokerage account, assuming your establishing can initiate the transfer and the charity can accept the funds by Dec. 31.