Tax Planning

 

Reading Time: 5 minutes

As the year draws to a close, it’s an ideal time to review your financial situation and make strategic moves to optimize your tax picture. At Intelligent Investing, we believe proactive tax planning is essential to effective wealth management. Thoughtful, year-end tax strategies can reduce your tax burden, enhance your financial flexibility, and maximize the value of your investments. By carefully managing taxes, you’re not only keeping more of what you’ve earned—you’re aligning your financial plan with your future goals.

At Intelligent Investing, we’re passionate about helping our clients navigate the complexities of tax planning with personalized advice and strategies tailored to your unique financial situation. If you’re looking to make the most of this year’s opportunities and set yourself up for success, we’re here to help.

Here are 20 essential year-end tax tips to consider:

1. 1. Make Last-Minute Charitable Donations If you itemize, consider charitable contributions to maximize your deductions. Be mindful of your deduction limits so you can make the most of your generosity.

   2. Optimize Your Annual Gift Exclusions The annual gift exclusion for 2025 is $19,000 ($19,000 for 2026) per individual. Maximize tax-free transfers to family or friends as part of your long-term gifting strategy.

   3. Evaluate Capital Gains and Losses Review your portfolio for potential capital gains and losses. Tax-loss harvesting allows you to offset gains with losses, which can reduce your taxable income. If your net capital loss exceeds the $3,000 annual limit, you can use the remaining amount to lower your ordinary income up to this limit each year and carry forward any additional losses to future tax years. This strategy can help manage your tax bill both now and in the years ahead.

   4. Use the Kiddie Tax Threshold If your child has unearned income, consider the kiddie tax rules. Up to $2,700 ($2,700 for 2026) of unearned income can be taxed at your child’s lower rate—helping you reduce the family’s overall tax burden.

   5. Contribute to Retirement Accounts Max out contributions to IRAs, 401(k)s, and other retirement accounts. For 2025, the 401(k) limit is $23,500 ($24,500 for 2026) and the IRA limit is $7,000 ($7,500 for 2026). These contributions reduce taxable income and help fund your retirement.

   6. Consider Donating Appreciated Stock Donating appreciated investments (held for over a year) can yield a double tax benefit: avoid capital gains tax on the growth and receive a charitable deduction for the full value. For investments held less than a year, your charitable deduction is generally limited to the cost basis (what you originally paid for the stock), not its current market value. This means you won’t be able to deduct the full appreciated value of the stock.

   7. Confirm RMD Compliance If you’re over 73, ensure you’ve taken your required minimum distribution (RMD) from traditional retirement accounts. Missed RMDs can incur a steep penalty. We handle this for all our clients to ensure no RMDs are missed.

   8. Maximize Tax-Free Accounts Check your Flexible Spending Accounts (FSAs) and dependent care accounts to ensure you’ve spent funds that won’t roll over into the new year. For 2025, the FSA contribution limit is $3,300 ($3,400 for 2026). Make the most of those contributions.

   9. Plan for Roth IRA Conversions Consider a Roth IRA conversion if it aligns with your tax strategy. Converting now can create tax-free growth in future years, especially if you’re in a lower tax bracket.

   10. Review W-2 Withholdings If you expect a significant change in income or deductions, adjust your W-2 withholdings for the upcoming year to avoid surprises.

   11. Contribute to a 529 College Savings Plan If saving for a child’s or grandchild’s education is one of your goals, consider contributing to a 529 plan before year-end. Many states (like South Carolina) offer a tax deduction or credit for contributions, and the funds grow tax-free if used for qualified educational expenses. It’s a valuable tool to help reduce future education costs while potentially lowering your current tax burden.

   12. Consider Tax-Advantaged Health Accounts Fully fund your Health Savings Account (HSA) if you have a high-deductible health plan. For 2025, the limit is $4,300 for individuals ($4,400 for 2026) and $8,550 for families ($8,750 for 2026). HSAs offer a triple tax benefit—tax-free contributions, growth, and withdrawals for qualified expenses.

   13. Make Final Estimated Tax Payments If your withholding or estimated payments are falling short, make a final estimated tax payment by January 15 to avoid potential penalties.

   14. Organize Your Tax Forms List expected 1099s, W-2s, and other tax forms. Preparing early makes filing smoother and helps catch any errors from financial institutions.

   15. Consider Accelerating Deductions or Deferring Income If you’re able, consider accelerating deductions into this year, such as paying property taxes or making mortgage interest payments early. Conversely, if you anticipate being in a lower tax bracket next year, you might choose to defer income to the following year. This strategy can help you manage your taxable income and potentially lower your overall tax liability, depending on your current and future financial situation.

   16. Plan for AMT Exposure High earners may be subject to the Alternative Minimum Tax (AMT). Review deductions that could trigger AMT, like state and property taxes, and adjust your plan accordingly.

   17. Pay Off Deductible Expenses Early Similar to the idea mentioned in 15, consider prepaying certain deductible expenses—such as mortgage interest or medical bills—if you’re close to maximizing your itemized deductions this year.

   18. Rebalance Your Portfolio for Tax Efficiency Rebalance your investments as part of year-end planning. This helps align with your target allocations and can minimize potential tax surprises next year. We monitor and rebalance our clients’ portfolios throughout the year.

   19. Plan for Non-Cash Contributions Donated items like clothing or household goods can be deductible if donated to a qualified charity. Remember to get a receipt and document the fair market value.

   20. Prepare for Higher Standard Deductions Similar to ideas mentioned earlier, if you won’t exceed the standard deduction this year $15,750 for singles ($16,100 for 2026) and $31,500 for joint filers ($32,200 for 2026), consider bunching deductions into every other year (e.g., doubling up on charitable gifts) to maximize tax savings.

Additional Items to Consider

• New Higher Catch-Up Limits (Ages 60–63): Effective for 2025, the “catch-up” contribution for 401(k) participants aged 60 to 63 has increased to $11,250. This is significantly higher than the standard catch-up for those age 50+.

• Estate Tax Exemption Increase: The federal estate and gift tax exemption is approximately $13.99 million for 2025 and rises to $15 million for 2026. This is a critical update for high-net-worth estate planning.

• 529-to-Roth Rollovers: You might consider adding a note about the ability to roll over unused 529 funds to a Roth IRA (up to a $35,000 lifetime limit), provided the account has been open for 15 years. This rule is now fully effective.

• Claim the New Senior Bonus Deduction If you are age 65 or older, you may now claim a new $6,000 bonus deduction ($12,000 for couples where both are 65+) on top of your regular standard or itemized deductions. Be aware that this benefit phases out for Modified Adjusted Gross Incomes (MAGI) over $75,000 for singles and $150,000 for couples. Ensure you meet the income requirements to claim this significant tax break for 2025 and 2026.

At Intelligent Investing, we view these tax strategies as essential components of your financial plan. Our fiduciary approach ensures that each strategy aligns with your long-term goals, reduces tax burdens, and preserves wealth for the future. 

Feel free to reach out for a complimentary call or coffee. Now’s the time to take action, and we’re here to help every step of the way. Let’s end the year with a strategic approach that sets you up for financial success in 2026 and beyond.

Schedule a short discovery call or meeting

Disclosure: This blog may reflect the perspectives and research of Intelligent Investing and, where applicable, incorporates insights from guest interviews or expert opinions. Any external views or opinions shared do not necessarily reflect the stance of Intelligent Investing. We may also utilize tools such as ChatGPT to enhance readability, grammar, and flow, while all core ideas remain proprietary to our firm.

Please note that Intelligent Investing does not provide specific tax or legal advice. All investments carry risks, including the potential loss of principal, and past performance is not indicative of future results. Any specific securities, sectors, or investment strategies mentioned are for informational purposes only and should not be considered a recommendation. We encourage readers to consult with Intelligent Investing for advice tailored to their unique financial situation. Unauthorized reproduction or distribution of this content is prohibited without proper credit to Intelligent Investing.

 

Reading Time: 3 minutes

At Intelligent Investing, protecting our clients’ wealth is more than just about managing portfolios—it’s about safeguarding every aspect of your financial life. In an ever-evolving digital world, scams are becoming more sophisticated and more personal. One of the latest threats is called “smishing,” and we’re here to make sure you’re prepared.

What is Smishing?

Smishing is a form of phishing scam that targets your text messages (SMS). Much like email phishing, cybercriminals use deceptive messages to lure you into clicking malicious links or revealing sensitive information. Recently, we’ve been alerted by our custodian, Charles Schwab, about an active smishing campaign targeting clients.

In these smishing attempts, clients receive fraudulent texts that claim a large disbursement has been made from their Schwab account. The text then prompts them to click on a link to cancel the transaction. The link leads to a fake website that spoofs a financial institution’s domain (i.e. if the scammer wants to scam a client of Charles Schwab—the scammer may want the client to click on a false website (e.g., “schwbba.com” or “schwabd.com”). These messages are designed to create panic, making people act before you think.

Red Flags to Watch For

Here are some common red flags to help you identify smishing attempts:

• Texts from international or suspicious numbers
• Notifications of large ACH transactions you didn’t initiate
• Links to domains that are subtle variations of trusted websites (e.g., “schwbab.com”)
• Urgent requests to reply or click immediately

How Panic Can Lead to Scams

These scams work because they trigger fear and urgency. Not long ago, one of our clients thought they were on the verge of losing a significant sum due to a suspicious call they received. Fortunately, because we have a close fiduciary relationship with our clients, they knew to call us first before acting on the message.

We immediately investigated and confirmed that it was a scam. Out of an abundance of caution, the client changed his login credentials with our custodian, Schwab. This quick action saved the client from potentially clicking on a malicious link or giving away sensitive information. In moments like these, we hope that having a trusted advisor can make all the difference.

How We Protect Our Clients

At Intelligent Investing, we stand between our clients and these types of threats. As a reminder, here’s how we help protect our clients’ wealth:

1. Verification Calls: We personally call to verify distribution requests that are non-recurring before they are processed.
2. Daily Monitoring: We receive daily alerts for any money movement in your accounts, keeping a close eye on all transactions.
3. Security Recommendations: We use and encourage robust security measures such as two-factor authentication and verbal passwords to add an extra layer of protection.

Why a Fiduciary Relationship Matters

Scammers exploit moments of panic and vulnerability. As we age, cognitive decline can make us more susceptible to these scams. This is why it’s crucial to establish a relationship with a fiduciary advisor long before these vulnerabilities set in.

A fiduciary advisor is legally and ethically bound to act in your best interest. We not only manage your investments but also help protect you from the unexpected threats that can jeopardize your wealth. Our proactive approach ensures that you’re not facing these dangers alone.

Final Thoughts

We’ve written a few blog posts about the emotional side of financial scams, and you can read more about How to Emotionally Heal after being Financially Scammed. You also may want to read about 11 Ways to Protect Yourself From Being Financially Scammed.  Better yet, if you or a loved one does not have a trusted relationship with a fiduciary advisor, and you would like to have accountability with a firm like ours, click here to schedule a complimentary call or coffee with us. We’d love to help you and your loved ones become more protected in this scam-filled culture.

Our clients’ financial security is our top priority. By staying informed and maintaining a strong relationship with a fiduciary advisor, you can navigate the increasingly complex digital landscape with confidence. Scammers may be clever, but with Intelligent Investing by your side, you’re never facing them alone.

Schedule a short discovery call or meeting

Disclosure: This blog may reflect the perspectives and research of Intelligent Investing and, where applicable, incorporates insights from guest interviews or expert opinions. Any external views or opinions shared do not necessarily reflect the stance of Intelligent Investing. We may also utilize tools such as ChatGPT to enhance readability, grammar, and flow, while all core ideas remain proprietary to our firm.

Please note that Intelligent Investing does not provide specific tax or legal advice. All investments carry risks, including the potential loss of principal, and past performance is not indicative of future results. Any specific securities, sectors, or investment strategies mentioned are for informational purposes only and should not be considered a recommendation. We encourage readers to consult with Intelligent Investing for advice tailored to their unique financial situation. Unauthorized reproduction or distribution of this content is prohibited without proper credit to Intelligent Investing.

 

Reading Time: 5 minutes

The winter chill has settled in once again, and with it comes memories of last year’s ice-skating adventure—the one that left me with a humbling lesson in balance, vulnerability, and, ultimately, a torn rotator cuff. Read more here. Since then, physical therapy, an MRI, and a well-placed steroid shot have been part of my journey back to health. This winter, though the shoulder pain persists, I find myself reflecting not on my stumble, but on a different kind of ice experience: hockey. Specifically, the wisdom of The Great One, Wayne Gretzky.

Gretzky famously said, “I skate to where the puck is going to be, not where it has been.” This insight into anticipating the game’s flow offers a perfect parallel to Intelligent Investing’s approach to wealth management. Just as Gretzky knew that success lay in anticipating the puck’s path, successful investing often requires a similar foresight—positioning yourself not based on where the markets are today, but where they are likely heading.

Resilience on Ice and in Markets

My recovery from the torn rotator cuff hasn’t been linear. There were setbacks, discomfort, and the need for physical therapy. But through resilience and the guidance of professionals, progress was made. Investing is much the same. Markets will fall. Asset classes will go out of favor. But patience, discipline, and a strategic approach—skating to where the puck is going—help us navigate volatility and emerge stronger.

Just like a skilled hockey player anticipates where the puck is going, not where it has been, investing wisely involves understanding where markets may be heading based on historical trends and valuation metrics. Markets exhibit a strong tendency toward mean reversion—when an asset class moves significantly above or below its historical average, it often eventually returns to that average. For instance, periods of extreme market exuberance or pessimism rarely last forever.

High valuations may correct downward, while undervalued assets often rebound. Disciplined rebalancing helps capitalize on this principle by strategically reallocating investments when certain assets deviate too far from their mean. This disciplined approach avoids chasing inflated markets and positions investors to benefit when temporarily depressed assets eventually revert back toward their historical norms.

Intelligent Investing’s Game Plan

At Intelligent Investing, we act as fiduciaries, committed to helping our clients make decisions that are in their best interest. Our proprietary Intelligrations® software we developed in-house integrates various financial technologies to create a clearer picture of your financial situation. We organize financial complexities, identify opportunities, and develop strategies that anticipate market movements rather than chase past performance.

Our approach combines:

• Minimizing Fees – Including taxes and unnecessary costs.
• Family Focus – Ensuring financial communication aligns across generations.
• Maximizing Time – So you can focus on what matters most.
• Leveraging Technology – To improve decision-making and behavior.

The Market’s Icy Terrain

Much like the ice rink I skated on last year, markets can be unpredictable, slippery, and occasionally rougher than anticipated. Many investors find themselves chasing recent performance, drawn to what has been successful. A prime example is Bitcoin and other cryptocurrencies. Over the past year, Bitcoin has surged, driven by a combination of factors—growing institutional acceptance, macroeconomic trends, and notable endorsements. The recent shift by figures like President Trump and Elon Musk toward favoring cryptocurrency has thrown speculation into full throttle, fueling a renewed frenzy.

While it’s tempting to jump in, history reminds us that chasing past success can lead to regret. The dot-com bubble of the early 2000s and the real estate crash of 2008 are cautionary tales of euphoria-driven investments that ultimately crumbled. I’m not suggesting that cryptocurrencies or Bitcoin are destined for the same fate, but prudence advises against investing out of a fear of missing out (FOMO). Emotional decisions driven by hype and speculation often lead to financial missteps.

The Antidote: Disciplined Rebalancing

Instead of reacting to the latest market headlines, a disciplined rebalancing approach offers a structured way to maintain investment integrity. At Intelligent Investing, we emphasize rebalancing portfolios based on each client’s risk tolerance and their Investment Policy Statement (IPS). This disciplined process ensures that portfolios stay aligned with long-term goals rather than being swayed by short-term market excitement.

When certain asset classes outperform and others lag behind, portfolios naturally drift from their target allocations. Rebalancing involves selling portions of the investments that have grown beyond their intended allocation and buying more of the assets that have temporarily declined. This approach effectively forces investors to do what many find difficult—selling high and buying low.

Rebalancing in Action

Imagine a scenario where equities have a strong year, increasing their share in a balanced portfolio. While it’s tempting to let those gains ride, disciplined rebalancing prompts us to take profits by selling some of those equities and reallocating to underperforming assets like bonds or other sectors that may be temporarily down. This method reduces the risk of becoming overexposed to a single asset class and helps maintain a portfolio that aligns with your risk profile and financial goals.

Avoiding Emotional Pitfalls

Rebalancing isn’t just a mechanical process; it’s a powerful way to manage investor behavior. When markets are soaring, it helps temper greed. When markets are falling, it can mitigate fear. Instead of chasing the latest “hot” investment, rebalancing keeps you grounded in a strategy designed to weather market volatility. It provides a framework that helps avoid emotional pitfalls, such as the fear of missing out or panic-driven decisions.

Ready to Skate Ahead?

As we step further into 2024, let’s remember that investing, like ice hockey, is a game of anticipation, discipline, and resilience. If you’re ready to skate toward where the financial puck is going, not where it’s been, we’d love to partner with you. Whether through a call or a coffee, let’s discuss how Intelligent Investing can help guide you toward financial success.

At Intelligent Investing, our disciplined approach to rebalancing, guided by our clients’ Investment Policy Statements, aims to keep portfolios aligned with individual goals and risk tolerances. Our proprietary Intelligrations® technology helps us efficiently manage and monitor portfolios, ensuring they stay balanced in a way that reflects our clients’ needs, not the latest headlines.

As we finish 2024, remember that maintaining discipline—whether on the ice or in the markets—is key to long-term success. Chasing the latest investment trend may feel exciting, but a well-balanced portfolio tailored to your goals is what truly paves the way for financial resilience and growth.

If you’d like to explore how a disciplined rebalancing strategy can help you stay on course, we’d love to connect—whether over a call or a coffee. At Intelligent Investing, we’re here to help you navigate the icy terrain of the markets with confidence and clarity.

P.S. – For more on embracing vulnerability and financial transparency, check out my previous blog post, Getting Naked. It might just change how you think about your financial journey

Schedule a short discovery call or meeting

Disclosure: This blog may reflect the perspectives and research of Intelligent Investing and, where applicable, incorporates insights from guest interviews or expert opinions. Any external views or opinions shared do not necessarily reflect the stance of Intelligent Investing. We may also utilize tools such as ChatGPT to enhance readability, grammar, and flow, while all core ideas remain proprietary to our firm.

Please note that Intelligent Investing does not provide specific tax or legal advice. All investments carry risks, including the potential loss of principal, and past performance is not indicative of future results. Any specific securities, sectors, or investment strategies mentioned are for informational purposes only and should not be considered a recommendation. We encourage readers to consult with Intelligent Investing for advice tailored to their unique financial situation. Unauthorized reproduction or distribution of this content is prohibited without proper credit to Intelligent Investing.