It's end-of-year tax planning time. As you get further along in your financial independence journey, there are likely more end-of-year tax planning items you'll need to be aware of. Having a checklist to review annually is useful. It's been an unusual year and December is that time to begin making end-of-year tax considerations. In addition to the normal checklist, there may be additional items to consider in this remarkably different year. Sean Mullaney says unique to 2020 are Roth conversions. While Roth conversions should be on the checklist every year, this year there was a much greater chance of diminished income which may provide the opportunity to make Roth conversions in a lower marginal income tax bracket. In any year when income is much lower than it normally is, Roth conversions would be at the top of your mind. The deadline is December 31 and there are no extensions. While complex situations may benefit from professional consultations, anyone with mostly W2 income can find their tax brackets online. If your income has dropped from 22-24% to 10-12%, locking in a Roth conversation at that lower rate is effective tax planning. A Roth conversion is when you go into a traditional IRA account and convert it to a Roth IRA. This is a taxable event, but you are intentionally choosing it because you are in a lower tax bracket for the year rather than convert or withdraw funds in a letter year when your income is higher and the taxes will be higher. How much money should be converted to a Roth IRA? Sean says he has never encountered a client who has had too much money in a Roth IRA. While the action is irrevocable, there is no penalty for converting too much. If a portion of the conversation is taxed at 22%, it is not the most efficient conversion, but your future self will likely still be quite happy that you did it. Some employers allow for Roth conversions within their 401K plans. The deadlines for completing some of these end-of-year tax planning checklist times vary. Solo 401Ks and qualified business income tax deductions should be completed as soon as possible. In addition to Roth conversions, another item with a Dec 31 deadline is charitable contributions. Checklist items with an April 15 deadline are traditional IRA, Roth IRA, and health savings account contributions. A good rule of thumb is individual tax accounts have a tax return deadline, not an end-of-year deadline. The reason solo 401Ks have an “as soon as possible” deadline is that unlike IRAs, solo 401Ks require more time and paperwork to do. It may not be necessary to have it funded by Dec 31, but you'll want it set up and have a well-documented game plan. S-corps do have to fund the employee-side by the end of the year. The first item on Sean‘s checklist is charitable contributions. With that category are two options to consider, a donor-advised fund if you plan to itemize deductions this year, or regular year-end charitable contributions. If you don't plan on itemizing, in 2020 up to $300 per tax return make be taken as a charitable contribution against your adjusted gross income. Another checklist item to be completed by the year's end are small business expenses since they are deducted when paid for, not when accrued. Businesses who have had a good 2020 may want to accelerate these payments to get the deduction this year. While businesses that have struggled in 2020 may want to hold off making payments until 2021. In response to a question from Brad regarding credit cards, Sean confirmed that credit cards work on a cash basis so the deduction takes place in the same in which the credit card was used, not when the credit card bill was paid. Paying bills with a check becomes a little trickier as you may need to prove to the IRS that the check was written and mailed on a business day prior to Dec 31 even if the vendor does not deposit the check until January of the following year. A backdoor Roth IRA applies when your income is too high to contribute to a re