Avoid The Ides of March By Planning Now

Brian Beck and Daniel Friedman

Ask Julius Caesar about how bad the Ides of March can be. On March 15, when the season of the Ides begins, he was assassinated. Officially, the Ides of March marks the day to settle debts, which Caesar’s murderous senators took to the extreme. For the rest of us, many see March 15 as the time to get serious about filing our tax returns. Wrong. For individuals and families who want to increase their wealth by decreasing their taxes, planning starts now. Officially, it started October 1, but there’s still plenty of time to do the planning to prevent the IRS from doing to you what the Roman senate did to their unsuspecting leader. Remember, the saddest words spoken on April 15 are “woulda, coulda, shoulda.”

Open enrollment is happening now. It’s the time when you can change your health insurance benefits and these benefits have tax implications. For instance, you could establish a flexible spending arrangement popularly known as FSAs. The accounts allow you to make contributions that are deducted from your earnings and aren't subject to income and payroll taxes. When open enrollment is over, so is your chance to take advantage of this tax benefit.

Further, if you are on Medicare and have a gap policy, now is the time to make the changes, so that the benefits you get match the needs you have. The frustration you may have experienced with the healthcare system in 2023, can be mitigated for 2024.

Sunset is coming. Many of the provisions in the Tax Cuts and Jobs Act (TCJA) will sunset in 2025. This means you have two years left before the tax regime you face gets turned upside down . . . again. The sunset changes will impact income tax rates and brackets, taxes on capital gains, gifting and inheritances. In short, everything.

And to give you a taste of how deep these changes will burrow your finances, those with employer-issued stock options need to consider if now – two years before the sunset – is the time to realize their gains. If you don’t make this decision before the year ends, your decision will be made for you. Woulda, coulda, shoulda.

Remember our mantra at WMGNA is your taxes affect everything you do, and everything you do affects your taxes. Take this, add in the sunset provisions, mix and stir, and what comes out is an imperative to act now.

By the way, here’s what the IRS told taxpayers about the TCJA after the law was passed. We offer this up because it might be interesting reading to some of our friends. We also offer it up, because once you take a look, we hope it will motivate you to contact us now. Really, it’s tough love.

Closer than you think. Sow now, harvest later. Trust us, we’re not poets, but we do appreciate this chestnut from Robert Louis Stevenson: Don't judge each day by the harvest you reap but by the seeds that you plant.

Now is the time to plant your seeds by harvesting tax losses and reaping a lower tax bill. Remember, 2022 was a miserable year in the stock market. And this year, unbelievably, it looks like there will be positive returns. Net, net, the pain of 2022 can be put to good use this year by taking some gains and offsetting them with last year’s losses. But, in a recurring theme, remember, this needs to be done by December 31. Also worth noting, taking losses should be done strategically, not simply out of fear of the tax man. Thankfully, investment technology enables investors to realize losses while still maintaining the various exposures the portfolio is designed to achieve.

October, November and December are happy months of the year. There’s Halloween, then Thanksgiving, and then December’s gift-giving binge. By all means, participate in this happiness, but beware, the Ides of March are lurking just around the corner.