As we come to the end of the year, it is important to be reminded of the tax strategies that might need to be implemented by December 31st. We have come up with a list of what we consider he top tax strategies to consider at this time of year:

Individuals

• Retirement Contributions: Consider contributions to a traditional IRA or Roth IRA account. Because of income limitations, a backdoor IRA might be a solution.
• Charitable Donations and Deductibility: If you are unable to take advantage of your charitable donations due to the large standard deduction, a donor advised fund could be a solution, which would allow for the bunching of deductions to improve deductibility.
• Donating Appreciated Stock: If you are interested in making charitable donations and hold appreciated stock, there are tax benefits for donating the stock directly to the charity.
• Required Minimum Distributions (RMDs): As a reminder, check with your financial advisor on possible required minimum distributions (RMDs) for your retirement accounts.  If you have charitable intentions, you can make qualified charitable distributions (QCDs) from retirement accounts, which satisfy requirement minimum distributions
• Roth Conversions: If you are anticipating taxable income for the year to be in the lower tax brackets, consider converting pre-tax retirement investments to a Roth retirement account with a Roth conversion.

Businesses

• PTE-E Tax Credit Program (Oregon): If your business has Oregon sourced income, is eligible for the PTE-E tax credit program and plan on making a 4th quarter estimated tax payment, which is due January 15th, consider making the payment in December to capture the expense in the current year.
• Remote Workforce Considerations: As employees continue to work remotely, be aware of the payroll and nexus issues associated with them doing so. You might have to register for payroll taxes and pay income taxes in those jurisdictions.
• Market-Based Sourcing (Portland/Metro Area): As a reminder, the City of Portland, Multnomah County, and the Portland metro area shifted to market-based sourcing for determining how your business income is taxed. It is important to have systems in place to properly track revenue that should be apportioned to these jurisdictions, even if your business is located outside these jurisdictions.

Tax-exempt organizations

• Clean Energy Tax Credits: Tax-exempt organizations should keep in mind that direct pay is a way for nonprofit organizations to install clean energy projects by receiving tax credits. This means they can now benefit from credits for investments in eligible renewable energy projects, like solar and wind, as well as for installing electric vehicle (EV) charging infrastructure and purchasing qualifying clean vehicles, even if they don’t owe federal income taxes.

Estate and trust

• Lifetime Gift and Estate Tax Exemption: The federal estate and lifetime gift tax exemption of $13.61 million in 2024 is currently expected to sunset after 2025 and drop to an estimated $7 million per taxpayer. If this happens, there are tax planning strategies that should be considered for estates that expect to exceed this threshold in the future.
• Annual Gift Exclusion: As a reminder, the annual gift exclusion for 2024 is $18,000 per gift recipient. If you are planning on gifting more than the exclusion amount, there are potentially ways to do so without exceeding the exclusion amount and having to file a separate gift tax return.

If you have questions, or want more information on any of these topics, please reach out to us and have a Happy New Year!