7 year-end tax tips to help you and your clients close the year successfully

By Lloyd Lofton

The end of the year is quickly approaching, and it’s time to turn your attention to closing out the year strongly. That means addressing the biggest necessary evil for your clients: tax time.

Although it may be a pain for your client to think about, the end of the year also is a great time to help clients learn what to pay attention to, where their money is going and how they can make the most of it.

The future is under no obligation to go along with your clients’ lack of plans and the end of 2022 brings with it some unique opportunities for your clients and for you.

How can you help your clients as the year winds down?

Reach out with phone calls, email updates and calls to action to meet with you in person or virtually. You can help your clients make the most of their money before the end of the year.

Preparing your clients’ finances for the end of the year involves taking a look at where they are right now and figuring out which last-minute moves are likely to help them position themself for a financially successful new year — whether they are in retirement now or planning to retire in the future.

With markets down approximately 20% year-to-date, it is worth paying particular attention to strategies such as tax loss harvesting, Roth conversions and making sure clients calculate their required minimum distributions correctly.

Here are some ideas you can take to your clients and how they will benefit from them.

End of year tax tips checklist

Max out contributions: Check how much room they have left in their contribution limit. If they have the ability to make additional contributions to their 401(k), individual retirement account or health savings account, they should consider making those contributions and reducing their tax liability.
Convert IRA to a Roth: If they are worried about taxes rising in the future and still have time on their side, a Roth conversion may make sense.
Offset capital gains: If they saw gains from taxable assets, check to see if they can offset them with losses. Review their portfolio to find losing investments and consider selling them as a way to offset the gains and reduce their tax bill as they rebalance their portfolio.
Make charitable contributions: Now is a good time to make charitable contributions to reduce their taxable income.
Give gifts: Don’t forget to lower their overall taxable estate by giving annual gifts to their loved ones. Be sure to stay within the limits so it doesn’t impact their estate tax exclusion or require them to file a gift tax return.
Use up their flexible spending account: Look at their FSA to see if they need to spend it down. The money doesn’t roll over, so look for ways to pre-spend before the new year or take care of procedures and purchases that are qualified needs.
Calculate RMDs: If it’s time to take RMDs, figure out how much they owe. If they’re concerned about taxes or wondering how they’ll meet their RMD, consider a qualified charitable distribution. Keep in mind the withdrawal requirements are based on balances as of Dec. 31, 2021.

Encourage clients to get in the habit of reviewing their end-of-year finances so that they can take advantage of potential tax breaks and position themself for financial success in the new year.

Lloyd Lofton is the founder of Power Behind the Sales. He is the author of The Saleshero’s Guide To Handling Objections, voted 1 of the 11 Best New Presentation Books To Read in 2020 by BookAuthority. Lloyd may be contacted at [email protected].