Q4 Tax Planning: Last-Minute Moves That Could Save You Thousands
October is here, which means you have exactly three months to make tax moves that could significantly impact your 2024 tax bill. While most people wait until April to think about taxes, smart wealth builders know that Q4 is when the real opportunities happen.
After 14 years of helping entrepreneurs and executives optimize their tax strategies, I've seen clients save tens of thousands of dollars with strategic year-end planning. Here are the most impactful moves you can still make before December 31st.
1. Max Out Your Retirement Contributions (The Low-Hanging Fruit)
401(k) Contributions: You can contribute up to $23,000 for 2024 ($30,500 if you're 50+). If you haven't maxed out yet, increase your contribution percentage immediately to capture the full deduction.
SEP-IRA for Business Owners: You have until your tax filing deadline (including extensions) to contribute up to 25% of compensation or $69,000, whichever is less. This is huge for profitable business owners.
Backdoor Roth Conversions: If your income is too high for direct Roth contributions, you can still do a backdoor Roth. Convert traditional IRA funds to Roth, especially if you expect to be in a higher tax bracket in retirement.
2. Harvest Your Losses (Turn Market Pain into Tax Gain)
Tax-loss harvesting is one of the most underutilized strategies I see. Here's how it works:
Sell investments that are down to realize losses
Use those losses to offset capital gains (and up to $3,000 of ordinary income)
Reinvest in similar (but not identical) assets to maintain market exposure
Pro Tip: Don't let the "wash sale rule" trip you up. Wait 31 days before repurchasing the same security, or buy something similar but not substantially identical.
3. Accelerate Business Deductions
Business owners have unique opportunities to reduce taxable income:
Equipment Purchases: Section 179 allows you to deduct up to $1.16 million in equipment purchases for 2024. Bonus depreciation can provide additional benefits.
Business Expenses: Prepay January expenses in December. This includes insurance premiums, professional memberships, software subscriptions, and office supplies.
Retirement Plan Contributions: Set up and fund a SEP-IRA, Solo 401(k), or defined benefit plan. The contribution limits are significantly higher than personal retirement accounts.
4. Strategic Charitable Giving
Charitable giving isn't just good for the soul – it's powerful for tax planning:
Donor-Advised Funds: Contribute appreciated securities instead of cash. You get the full deduction while avoiding capital gains taxes on the appreciation.
Qualified Charitable Distributions: If you're 70½ or older, donate directly from your IRA to charity. This counts toward your required minimum distribution without increasing your taxable income.
Bunching Strategy: Instead of giving $10,000 annually, consider giving $30,000 every three years to exceed the standard deduction threshold and maximize your tax benefit.
5. Roth IRA Conversions (Play the Long Game)
If you've had a down year income-wise, or if you expect to be in a higher tax bracket later, consider converting traditional IRA funds to Roth. You'll pay taxes now at potentially lower rates and enjoy tax-free growth forever.
Strategy: Convert just enough to "fill up" your current tax bracket without pushing yourself into the next one.
6. Qualified Opportunity Zones (The Hidden Gem)
If you have significant capital gains, Qualified Opportunity Zone investments can:
Defer capital gains taxes until 2026
Potentially eliminate taxes on QOZ investment gains if held for 10+ years
Provide diversification into real estate and operating businesses
This is particularly powerful for entrepreneurs who've sold businesses or real estate this year.
7. 1031 DSTs for Real Estate Investors
If you're sitting on appreciated real estate, a 1031 DST can defer capital gains taxes indefinitely while upgrading your investment portfolio. The key is proper planning and working with qualified intermediaries.
8. Health Savings Account Triple Play
HSAs offer the only triple tax advantage available:
Tax-deductible contributions
Tax-free growth
Tax-free withdrawals for qualified medical expenses
For 2024, you can contribute up to $4,300 (individual) or $8,550 (family), plus an additional $1,000 catch-up if you're 55+.
9. Estate Planning Moves
Annual Gifting: You can gift up to $18,000 per recipient in 2024 without using your lifetime exemption. Married couples can combine this for $36,000 per recipient.
529 Plan Superfunding: Contribute five years' worth of annual exclusions at once ($90,000 individual, $180,000 married) to a 529 plan for education expenses.
10. Review Your Withholdings and Estimated Taxes
Nothing worse than a surprise tax bill or underpayment penalties. Review your year-to-date withholdings and make estimated tax payments if needed. The safe harbor rule requires you to pay 100% of last year's tax (110% if your AGI exceeded $150,000).
The Entrepreneur's Special Considerations
If you're a business owner, you have additional opportunities:
Income Timing: Delay invoicing until January or accelerate collections into December
Expense Timing: Prepay deductible business expenses
Retirement Plan Setup: Establish a Solo 401(k) or SEP-IRA before year-end
Equipment Purchases: Take advantage of Section 179 and bonus depreciation
Don't Go It Alone
Here's the reality: tax planning isn't just about saving money this year. It's about creating a comprehensive strategy that aligns with your long-term wealth-building goals. The best tax moves are often part of a broader financial plan that includes investment strategy, estate planning, and risk management.
Every client's situation is unique. What works for a tech entrepreneur in Colorado might not be optimal for a real estate investor in Florida. The key is having a team that understands both the tax code and your specific financial picture.
Time is Running Out
The clock is ticking on 2024 tax planning. Some strategies, like retirement plan contributions, can be done until your filing deadline. But most of these moves must be completed by December 31st.
Don't let another year slip by without optimizing your tax strategy. The difference between reactive tax preparation and proactive tax planning can literally be thousands of dollars in your pocket.
What's your biggest tax planning opportunity this year? The strategies that seem most complex often provide the greatest benefits – but only if you act before the calendar turns to 2025.
