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10 Steps Clients Should Take Before Year End


As the end of the year approaches, your client's attention toward financial matters may wane. However, CPAs and other accounting professionals must keep clients on track to meet important year-end deadlines. Here, Bryce Sanders of Perceptive Business Solutions explains why qualified clients should take RMDs now, when a gift-tax exclusion might make sense and other issues to address before January 1. 

Nov 15th 2021
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Many clients go on cruise control after Thanksgiving. As the holidays approach, their minds are elsewhere, and they put off making financial decisions. They may say, “Call me in the New Year.” As an accounting professional, you know that December 31 is one of several hard-stop deadlines in your business. Here’s what your clients should address before the ball drops on New Year’s Eve.

Tax-loss selling. The Dow Jones Industrial Average is close to a historic high. As of November 12, it was up almost 18 percent YTD. If your client has had a good year in the market so far, they should be looking at realized short- and long-term capital gains, and then determining if they can do any tax-loss harvesting.  

Realizing capital gains. We don’t know how the federal tax laws will change. Your client might choose to sell appreciated stock or other assets to book capital gains in 2021. Although we don’t know if the capital gains tax rate will change, there’s a saying that’s fitting here: “The devil that you know is better than the devil that you don’t know.”   

Year-end charitable contributions. Americans in general are generous to charities. A large number of donations are made in December, especially in the last few days of the year. Your client probably wants these donations to count as 2021 charitable contributions. Transferring appreciated stock is a smart strategy since the unrealized capital gain isn’t their problem.

Retirement plan contributions. You might be able to wait until April 15, but you don’t know what your client’s cash on hand or the condition of the stock market will be at that time. If your client is over 50 and missed some contributions, your client can make catch-up contributions. If your client has the cash available, this approach makes sense.

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