Potential Financial Steps for T-Mobile Employees in November
By Kevin Estes
Oh, What a Night!
As is usually the case with Halloween, last night was magical.
We again celebrated at the bottom of our hill with neighbors and friends.
Bonfire. Snacks. Drinks. Trick or Treaters. Good conversations with even better people! 🔥
Potential Steps for T-Mobile Employees This Month
Financial steps T-Mobile employees might take in November include:
Schedule spring Paid Time Off (PTO)
Plan tax loss or gain harvesting, if any
Finalize year end charitable contributions
Purchase holiday gifts
Review / rebalance investment portfolio
Of course, this assumes the open enrollment elections have been finalized. If not, do that first! It’s due Friday, 11/3!
1. Schedule Spring Paid Time Off (PTO)🌴
You’ve already booked the rest of your vacation for 2023 (right, RIGHT?!). It’s time to consider spring.
Do you remember those cold and dreary days in February? Now might be a good time to plan a vacation before prices rise!
Of course, the biggest benefit of scheduling Paid Time Off now is that you call dibs! Many teams have limited coverage so get yours approved early.
2. Plan Tax Loss or Gain Harvesting, If Any
Income is roughly broken into three buckets for taxes:
Earned
Investment
Passive
Earned
Earned income is what someone receives from working. This could include working for a company, self-employment, or both!
Investment
Investment income is money earned from investments like stocks, bonds, mutual funds, indices, etc. Because the U.S. government wants to encourage capital funding, investments may have lower tax rates than earned income.
Passive
Passive income is for things like rental real estate, limited partnerships, and equipment leases. If someone materially participates in the business, it’s often considered active and would be considered earned income. The definition of material participation gets a little complicated and is beyond the scope of this post. 😉
Rarely Mix
The important thing is that these buckets are rarely allowed to mix.
For instance, passive investments were once abused by higher income earners using them as tax shelters. That’s why they’re now accounted for separately. Passive activity losses (NOT your PAL!) generally don’t reduce earned income.
The same is usually true for investments. Investment losses normally don’t lower earned income and (therefore) taxes.
Tax Loss Harvesting
However, there’s an exception! Up to $3,000 in net investment losses CAN reduce earned income and therefore lower taxes.
The important term is net.
If someone sold investments for the year which together realized $7,000 of gains, they would need to sell other investments which realize $10,000 in losses to arrive at the $3,000 net loss.
For earners in higher tax brackets, these losses may help reduce their tax bill a bit.
Tax Gain Harvesting
There’s also tax gain harvesting. This occurs when someone has lower income than they normally would.
Their deductions and lower tax bracket might result in it making sense to sell investments before year end. They might pay less tax on the sale in 2023 than they would in future years!
3. Finalize Year End Charitable Contributions
Among other things, the Tax Cuts and Jobs Act of 2017:
Capped the state and local tax (SALT) deduction at $10,000,
Lowered the deductible mortgage debt balance from $1,000,000 to $750,000 (existing mortgages were grandfathered), and
Doubled the standard deduction.
More people now use the standard deduction.
Good news! That simplified taxes for millions of Americans.
Bad news! That resulted in fewer people itemizing their deductions, effectively reducing the tax benefits of charitable giving for many taxpayers.
Nonetheless, millions of Americans still use itemized deductions. It may pay to think strategically about charitable giving at year end.
Some especially interesting techniques include:
Bunching - giving more in one year instead of spreading it over multiple years
Donor Advised Fund - donating now and then advising on how the funds are distributed in future years
Donating Appreciated Asset - giving a highly appreciated asset to charity (which don’t pay taxes) instead of selling it, paying taxes, and donating what’s left to charity
T-Mobile employees may also have access to special employer match opportunities on the Tuesday after Thanksgiving, 11/28/2023.
4. Purchase Holiday Gifts🎁
It’s nearly the most wonderful time of the year!
Purchasing gifts early can guarantee they aren’t already sold out and arrive in time.
The end of the month includes days with historically deep discounts:
Black Friday, 11/24/2023
Small Business Saturday, 11/25/2023
Cyber Monday, 11/27/2023
It doesn’t just have to be for gifts! I have some business items I hope to buy on sale. 🤞
5. Review / Rebalance Investment Portfolio
Finally, now’s may be a great time to review and rebalance portfolios.
This year’s seen some excitement in the market. Investments may have drifted from their planned allocation!
T-Mobile employees may have recently stocked up (literally) through the Employee Stock Purchase Plan. Restricted Stock Units (RSUs) vest in February. It’s worth considering just how much company stock to hold.
What’s Missing?
Is anything missing from this list? If so, please let me know!
If you’re interested in a review of your specific situation…
Disclaimer
In addition to the usual disclaimers, neither this post nor this image includes any financial, tax, or legal advice.
