8 Year-End Tax Moves to Keep More Money Now (Under $120k)

Maximize Your Tax Savings Before December 31st

If you earn under $120,000 annually, you're leaving significant tax savings on the table without realizing it. After analyzing this tax professional's guidance, I've identified eight actionable strategies that align perfectly with IRS regulations. These methods aren't loopholes, they're intentional tax code provisions designed for middle-income earners. Implementing even one could save you hundreds or thousands this tax season.

Capitalize on 0% Long-Term Capital Gains

The IRS allows complete tax exemption on qualifying investment profits if your income falls below specific thresholds:

• $60,000 for single filers
• $80,000 for heads of household
• $120,000 for married couples filing jointly

This applies only to assets held over one year before selling. The video correctly notes these figures include your standard deduction and adjust annually for inflation. What many overlook: You can strategically realize gains during low-income years. If your commissions dip or you take unpaid leave, that's the ideal time to sell appreciated stocks or crypto tax-free. Remember, this exemption covers federal taxes only. State taxes still apply, though seven states have no income tax.

Master Tax Loss Harvesting Techniques

Sell underperforming stocks by December 31st to offset taxable gains. This powerful strategy reduces your current year tax bill, but requires strict adherence to IRS wash sale rules. If you repurchase the same security within 30 days before or after selling, you forfeit the deduction.

Practical implementation tip:

1. Identify losing positions in your portfolio
2. Sell them by December 31
3. Consider purchasing a similar (not identical) investment to maintain market exposure
4. Wait 31 days before rebuying the original asset

Critical warning: Never let tax strategy override sound investment decisions. Only harvest losses from assets you'd sell anyway.

Strategic Roth Conversions in Low-Income Years

Converting traditional retirement funds to Roth accounts during low-tax years creates permanent tax-free growth. If you're temporarily in the 10% or 12% bracket, paying conversion taxes now beats higher future rates. The video's example highlights why this works: A $10,000 conversion at 12% costs $1,200 today but saves thousands in future decades.

Three conversion scenarios to consider:

1. Career gaps between jobs
2. Semi-retirement with reduced income
3. Years with significant business deductions

Education and Health Savings Opportunities

529 Plans offer state tax deductions in 34 states and tax-free growth for education expenses. You have until December 31 to contribute for current-year state benefits. Key considerations:

• Funds can cover your own education, not just children's
• California offers no deduction but still provides tax-free growth
• Beneficiaries can be changed if original plans change

Health Savings Accounts (HSAs) deliver triple tax advantages: deductible contributions, tax-free growth, and tax-free withdrawals for medical expenses. Self-employed individuals have until April 15 to contribute, but W-2 employees must act through payroll deductions by December 31. The video's HSA analysis is accurate, but I'll add: Invest your HSA funds once you exceed your deductible amount for compounded tax-free growth.

Business Expense Timing and Retirement Planning

Self-employed individuals and gig workers should accelerate deductible expenses into the current tax year. Purchase necessary equipment, supplies, or prepay Q1 expenses before December 31. The transaction date determines deductibility, not payment date.

For Flexible Spending Accounts (FSAs), use remaining funds by December 31 or risk forfeiture. Most plans don't allow rollovers, though 47% offer a 2.5-month grace period according to EBRI research.

Traditional IRA contributions have an April 15 deadline, but earlier action compounds growth. The video correctly notes deduction limits phase out at certain incomes, but the 2023 contribution limit is $6,500 ($7,500 if 50+).

Action Plan and Resource Recommendations

Immediate Year-End Checklist

1. Calculate capital gains exposure
2. Harvest investment losses by December 31
3. Accelerate business deductions
4. Verify FSA balances
5. Fund 529 plans for state deductions

Recommended Tools

• Free IRS Publication 550 for investment tax rules
• Vanguard's tax-loss harvesting calculator
• Your state's 529 plan portal

Final Considerations

These strategies work best when your tax bracket remains stable year-to-year. The 0% capital gains provision is particularly valuable for middle-income investors building long-term wealth.

"When reviewing your portfolio, which tax-saving strategy seems most applicable to your situation? Share your implementation plan in the comments."