RTS #033 Don’t close the books on 2023 just yet

Hit the pause button on your excitement for 2024 for just a minute, and let’s make sure we are wrapping up everything from 2023. When it comes to taxes, most people immediately assume when the calendar turns over, 2023 is done, and it’s time to gather documents and just move onto the tax filing. In a lot of cases, that makes sense, BUT there are still opportunities available to us over the next couple of months.

Many of our readers will recognize the image in this newsletter from RTS Newsletter #018, but that’s the beauty (and sometimes curse) of taxes: they just keep coming back around. The table below outlines several common tax planning areas that are time-sensitive by tax year and gives you the ones that still have an opportunity for 2023, even though we are 19 days into 2024.

And remember, “IRA Contributions” include backdoor Roth contributions. For clients with the cash flow to do it, you could actually get the 2023 and 2024 backdoor Roth contributions taken care of at the same time and be done with it. The conversion for the 2023 contribution would be, of course, be reported in 2024, but you would still help the client get the benefit of both year’s contributions limits. We have an entire masterclass on backdoor Roth contributions (RTS Members can access it here), and here’s what Graham just had to say about it:

“I am working through the RTS Backdoor Roth Conversion MasterClass, and I wanted to let you know that this is a wonderful value add and great content.”

This list is far from the most exotic collection of tax planning strategies. None of them will individually change the course of a client’s financial future in a single year. But they have the power to deliver massive value over time if executed consistently and correctly. Even better, they don’t exist in silos; some of them can be used simultaneously to make sure we are taking advantage of opportunities to use these small hinges to swing big doors. And if you take the time to review your clients’ situations for these opportunities, don’t forget the dishwasher rule. Let them know you’ve taken the time to do it, even if they are “all set” for 2023.

If you are ahead of the game and have taken care of all of these for all of your clients for 2023, congratulations! Use this list to make sure you have a plan for when these will be taken care of in 2024.

What can you do about it?

These can all be fields in your CRM so you can easily run a report for which clients these opportunities are relevant to (no need to review HSA contributions for clients on Medicare). If you are going one by one through all of your clients and checking for every tax area this is a great opportunity to improve your approach and be more systematic.

Happy Tax Planning!

About The Newsletter

The tax code is 80,000+ pages and Google has 875,000,000 results when you search “Tax Planning”, so each week we are going to help you wade through all of that noise and get to the Relevant Tax Stuff.