Answering Last-Minute Tax Questions and Preparing for 2025

With about a month until Tax Day on Tuesday, April 15th, you should, ideally, have all your financial documents collected. It might be a good idea to check in one last time with your financial advisor before you send your 2024 data to your CPA or start plugging away on your favorite tax software.

But as you put a bow on last year, it's important to keep an eye on the future, especially for retirees. Cracking open your nest egg and sequencing how and when you use your assets and benefits is a complex process. Decisions you make today can affect your lifetime tax liability, the lifestyle you can enjoy during your Golden Years, and your legacy planning.

On today's show, we use this combination of short-term and long-term perspective to tackle some listener tax questions and explain how the Keen Wealth Advantage can help you feel more confident about how taxes fit into your comprehensive planning.

1. " What should you do with large capital gains during retirement?"

Let's assume this listener is talking about long-term capital gains, meaning profits on a security that you have held for at least one year and one day. These gains are taxed at a preferential rate that's lower than the rate on your other income. Here are the brackets for 2025 (meaning the taxes you will file next year):

0% Tax Rate

• Single filers: up to $48,350

• Married filing jointly: up to $96,700

15% Tax Rate

• Single filers: $48,351 to $533,400

• Married filing jointly: $96,701 to $600,050

20% Tax Rate

• Single filers: over $533,400

• Married filing jointly: over $600,050

There are several strategies for lowering your overall income so that your capital gains are taxed at a lower rate.

One is gifting cash or shares of stock. In 2025, you can give up to $19,000 to a friend or family member; married couples can give $19,000 each. You can also make direct contributions to a charity or contribute to a donor-advised fund that you can use to make donations at a later date.

Another strategy is tax-loss harvesting. Your advisor can analyze your portfolio, sell positions that are down to lock in a loss that offsets other gains for tax purposes, and then use that cash to rebalance.

Remember, if you didn't make these kinds of moves before December 31, 2024, there's not much you can do between now and April 15th. That's why, at Keen Wealth, tax planning is part of our year-round, checklist-driven process. We're constantly weighing various tax strategies throughout the year and providing folks with advice that's tailored to their individual best interests.

2. " Does Keen Wealth facilitate charitable donations of appreciated stock? What are some of the pros and cons of those donations?"

Yes, Keen Wealth can help you donate stock.

The pros are that, by donating appreciated securities, you avoid paying capital gains tax on the positions you donate and you receive the full amount of the gift as a tax deduction. And if you donate enough to itemize rather than taking the standard deduction, you might be able to reduce your overall tax liability even more for the year.

If you were already planning on making a donation to your church or other charitable organization and you have appreciated securities in your portfolio, there is really no con to donating the security instead of cash. A caveat would be to make sure that you initiate the donation to the specific charity or perhaps a donor advised fund while there is still time for your financial institution and the receiving entity to process the gift. In other words, don’t wait until the last week of the year to start this process as some custodians and charities move slower than others when dealing with stock transfers and may well be short staffed the last few weeks of the year during the holidays.   

3. " Are Medicare premiums always based on the previous two years of your income, or does that stop at some age?"

Medicare Part A (hospital insurance) is always free for enrolled seniors.

There are two pieces to what seniors pay every month for Medicare Part B (medical insurance).

The base premium is the same for everyone: $185 per month in 2025.

For 2025, looking at your income from two years ago, single filers who earned above $106,000 and married couples filing jointly who earned above $212,000 will have to pay an Income-Related Monthly Adjusted Amount (IRMAA) on top of their premiums. Your premiums are calculated this way every year that you are on Medicare. In the fall you should receive a notice from The Centers for Medicare & Medicaid Services telling you what your full premium for the following year will be.

4. " I'm 55 years old and I'm planning to work until I'm 65. I am maximizing my contribution to my Roth IRA and my Roth 401(k) every year. Is maximizing my Roth accounts a mistake?"

Generally, any time you're saving money for the future, you're making a good decision. Maxing out your Roth IRA and Roth 401(k) means you're putting money you've already paid taxes on into accounts that, in all likelihood, are going to keep growing. And when you’re ready to take that money back out in retirement, you won't have to pay taxes on it again.

But is making contributions to a Roth better for this listener than making contributions into a tax-deferred account, claiming a tax deduction for the current year, and then paying taxes on future withdrawals?

That depends on a lot of things we don't know about this listener: their overall income level, what other kinds of accounts they have, their total tax liability, and, perhaps most importantly, what their retirement goals are. Hopefully this listener talks to an advisor who can help them answer this question in that larger context.

5. "Can you roll over required minimum distributions into a Roth IRA?"

No. Once you have to start taking RMDs at age 73, you can invest your RMD in a taxable account, but not a Roth IRA.

6. "Is the Social Security Trust Fund going to run out of money?"

- Steve S., Portland

Hopefully my podcast co-host isn't thinking about retiring on me!

This is a question that's on the minds of many folks in their early 60s, especially given how much it's argued about in the news and on social media. But while none of us has a crystal ball, it's hard to imagine a scenario where our leaders in Washington let Social Security go bankrupt. Too many people depend on these benefits to support their retirement. And while the system might require some tinkering to remain solvent, any dramatic changes would have to come after a decades-long runway so seniors have time to prepare and adjust their plans.

Do you have any last-minute questions about your 2024 taxes? It's not too late to sit down with a Keen Wealth advisor who can help you wrap up last year and start planning for the year ahead.

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About Bill

Bill Keen is a financial advisor with over 30 years of industry experience. As the founder and CEO of Keen Wealth Advisors, a registered investment advisory firm, he focuses on providing personalized retirement planning designed to help people thrive before and during their retirement years. With a passion for educating others, Bill regularly blogs about retirement planning, hosts the podcast Keen on Retirement, and has contributed to Forbes, U.S. News and World Report, Reuters, Wall Street Journal’s Market Watch, Yahoo Finance, and other publications. Based in Overland Park, Kansas, Bill and his team work with clients throughout the greater Kansas City area and across the nation. To learn more, connect with him on LinkedIn or visit www.keenwealthadvisors.com.

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