It’s the 3rd Quarter – Let’s finish Strong

August 28, 2023by Jon Dockery0

It’s hard to believe that we are almost to the end of Summer. My year seems to be going especially fast as we just recently dropped my second kid off at college. As we dropped him off and got him set up in his apartment, I tried to think of all the things he would need to be prepared for as he goes through his first semester. Of course, he didn’t want to think about most of it as it seems so long until December when the semester will wrap up.

I think some of us are the same way when it comes to our financial lives. It seems like we have so long, but the end of the year comes quickly. In fact, the 3rd Quarter estimated tax payments are just around the corner on September 15th. I get a lot of questions related to estimated tax payments from “Why do I have to make them?” to “How much do I need to pay?”.

If you’ve determined that you need to make estimates, there’s a lot that can go into determining how much you should pay. You also have some opportunities to make strategic moves to limit the amount of tax you will owe for this year or even potentially for years to come. Most of those moves must be made by year-end, but there are even some moves that you can plan to make before you file the 2023 tax return.

Contributions to Retirement Accounts: You may want to consider increasing your 401k deferrals for the rest of the year to get as much in as possible by December 31st. If you have an IRA, you can make contributions up until Tax Day for 2023. Either of these options should result in reduced taxable income for the tax year 2023.

Charitable Contributions: If you itemize your deductions, you may want to consider making gifts to the charities that you love to support. The organizations will be grateful, and you will get a tax deduction. Just make sure you get a receipt detailing your gift.

ROTH Conversion: If you have a traditional IRA, you could convert it to a ROTH IRA. There will be tax implications with this conversion, but we may be able to make a calculated decision to convert in a year that results in an overall lower tax situation.

Investment Strategies: Your investment accounts need to be monitored and can provide opportunities to save taxes this year through tax-loss harvesting or even using long-term planning tools to divest yourself of highly appreciated investments.

Estimated Tax Payments: Ultimately, you may still owe some taxes, so you need to ensure you’ve paid enough to avoid penalties and interest. On the other hand, you may have already paid too much in and need to reduce your future payments. Either way, a good working relationship with your CPA will allow you to make the proper move.

As the third quarter comes to a close, it’s time to take an assessment of your situation, make some strategic tax moves, and possibly reach out for assistance. If you need help, we have a Purpose-Built Planning© process designed to gather the facts and help you make a well-informed decision.

Jon Dockery

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