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Year-end Tax Planning Checklist: 5 Topics to Review

November 10, 2022
Susan Grice
Susan Grice

Who wants to pay more taxes than they need to? No one. And year’s end is a good time to look for opportunities that might reduce what you owe on April 15.


Year-end Tax Planning Checklist


It can help to get organized first — gathering essential financial paperwork and reviewing last year’s return. Then consider changes in your life that might impact taxes, such as relocating, retiring, starting a business or funding an endowment. Next, you may want to review this checklist of five important income and estate tax topics with your financial and tax professionals.


1. Annual Gift Exclusions

If you’re thinking about transferring wealth or providing financial assistance to loved ones before the year ends, the annual gift tax exclusion may let you do so without paying a gift tax. For 2022, the annual gift tax exclusion allows you to give tax-free gifts of up to $16,000 per person to as many people as you want.

This is one way to gradually transfer wealth to heirs. You could also pay education or medical expenses for a child or grandchild if you make payments directly to the school or healthcare provider.

Some people take advantage of a special 529 plan strategy, which allows you to contribute five years’ worth of annual exclusions in a single year to the education savings plan for a child or grandchild. Some states may also offer a tax deduction on the contributions.

Note that both you and your spouse can give tax-free gifts up to the exclusion limit. For instance, you could each give $16,000 to the same individual without triggering a gift tax. In addition, you can give any amount to your spouse free of the gift tax.


2. Charitable Contributions

If you want to fulfill charitable goals before end of year, are over age 70-1/2 and have an IRA, you might consider directly transferring required minimum distributions — up to $100,000 annually — to a qualified charity. This excludes the money from your gross income. Restrictions apply, so discuss the details with your tax advisor.

Another option is to donate cash or appreciated assets. Many people look first at illiquid assets with a low basis — perhaps a piece of artwork. Donating the asset may provide a charitable tax deduction while preventing a capital gains tax.

A third strategy is to establish a charitable trust or private foundation. These may provide a charitable contribution and deduction for 2022 while also providing for future charitable benefits over time.


3. Tax Loss Harvesting

Reaping gains is a benefit of having a good investment plan, but those gains can create a tax burden. Besides donating appreciated assets, you might talk to your portfolio manager about tax loss harvesting. Realizing capital losses by selling certain taxable investments may help offset taxes on gains made in 2022.

Keep the wash sale rules in mind and avoid repurchasing the same or substantially similar security within 30 days of the sale.


4. Retirement Planning

If you have a 401(k), you may want to maximize your contributions before the tax-filing deadline. For 2022, you can contribute up to $20,500 pre-tax dollars — plus an additional $6,500 if you’re age 50 or older — to lower your taxable income.

If you have earned income, you can contribute to a traditional IRA, as well — up to $6,000 per year plus an additional $1,000 if you’re age 50 or above. If your spouse doesn’t work, you can also contribute to a spousal IRA on their behalf.

If you don’t have a retirement plan through work, you may be able to deduct the full IRA contribution amount, regardless of income. Otherwise, most high net-worth individuals will have incomes above the phase-out limit for deductions. Likewise, most high net worth individuals cannot contribute to a Roth IRA due to income limits.


5. Estate Planning

Year-end is a good time to review your estate plans and work with your financial professionals to identify tax-management opportunities and revise or implement your strategies. Part of the discussion might cover the lifetime gift and estate tax exclusion, which is $12.06 million for 2022 and set to expire in 2026. You might also discuss whether it makes sense to establish and fund trusts by end of year to take advantage of certain tax laws.


Move Forward

Your financial professionals can assist you with year-end tax planning and help you prepare for the new year. Your Hancock Whitney team can work closely with your tax advisor and others to keep you informed of changes in tax laws, help simplify tax time and assist in reducing your tax burden for 2022.


Talk to a Private Banker


The information, views, opinions, and positions expressed by the author(s), presenter(s), and/or presented in the article are those of the author or individual who made the statement and do not necessarily reflect the policies, views, opinions, and positions of Hancock Whitney Bank. Hancock Whitney makes no representations as to the accuracy, completeness, timeliness, suitability, or validity of any information presented.

This information is general in nature and is provided for educational purposes only. Information provided and statements made should not be relied on or interpreted as accounting, financial planning, investment, legal, or tax advice. Hancock Whitney Bank encourages you to consult a professional for advice applicable to your specific situation.

Hancock Whitney Bank offers investment products, which may include asset management accounts, as part of its Wealth Management Services. Hancock Whitney Bank is a wholly owned subsidiary of Hancock Whitney Corporation.

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