I am so thankful every year to disconnect around the holidays and this year is no exception.

Among the many traditions of the holidays, one has to be navigating our complex tax system. :)

Every year there are a number of end of year activities to consider. They are irregular (as they happen annual) and complex. So they warrant a checklist to remember what should be considered. This is written for myself but sharing publicly if helpful for others.

For additional context, see my Personal Finance Advice post.

[ ] Tax Loss Harvesting

Sell stock and fund holdings that have capital losses to offset capital gains or take advantage of $3k offset to ordinary income. Note: losses in excess of $3k carry over year to year indefinitely and can be applied to future gains.

[ ] Capture gains in children's UTMA / UGMA accounts

In 2021, first $1100 of gains is tax free and next $1100 is tax advantaged source.

[ ] Consider extra donations if itemizing deductions

Common itemized deductions are:

  1. State & local taxes up to $10k
  2. Mortgage Interest
  3. Charitable contributions

If these are above the standard deduction ($24,800 in 2020) then you are likely itemizing your deductions. Additional contributions to charity should help reduce taxable income. If you don't know where to donate right away I highly recommend a charitable fund like Schwab Charitable. Also, if possible, donate stock that has high capital gains as opposed to donating cash. This is a tax advantaged approach as the full market value counts as a charitable contribution (the cost basis does not matter in this case). No capital gains is applied.