Year-End Tax Moves Every High-Income Maryland Household Should Run Before December 31

High-income households in Maryland routinely overpay tax in the fourth quarter — not because the strategies are exotic, but because no one is coordinating them. Your CPA prepares the return. Your advisor manages the portfolio. Your attorney drafted the trust. And the calendar keeps moving.

This guide walks through the year-end moves that actually matter for households earning $500,000 or more in Maryland, the District of Columbia, and Northern Virginia. It is not a list of tips. It is the sequence we run with clients every November and December.

1. Re-forecast taxable income before you do anything else

Every meaningful year-end move depends on knowing where you will land. Before harvesting losses, converting to Roth, or writing a charitable check, you need an updated projection of:

• W-2 wages and bonus timing
• K-1 distributions and pass-through income
• Capital gains already realized
• Estimated tax payments made
• Itemized deduction stack (state tax cap, mortgage interest, charitable)

A 30-minute projection in early November tells you whether you are about to cross a bracket, trigger the 3.8% Net Investment Income Tax, or push into the additional Medicare surtax. Every move below is calibrated against that number.

2. Manage the bracket, not just the bill

The federal brackets matter, but in Maryland the real game is the combined marginal rate. A Bowie or Prince George's County household at the top of the 24% federal bracket is paying roughly 5.75% state + 3.20% local — a combined marginal rate that can exceed 32% before NIIT. Crossing into the 32% federal bracket pushes the combined number above 40%.

Two questions to ask:

1. Should I accelerate income into this year? If you expect higher rates next year — because of a bonus, a business sale, or scheduled sunset of the 2017 tax cuts — pulling income forward can lock in today's brackets.
2. Should I defer income into next year? If next year looks lower (retirement, sabbatical, business loss), deferring a bonus or delaying a Roth conversion can save real money.

3. Harvest losses with intention

Tax-loss harvesting is not "sell whatever is red." It is a coordinated move that pairs realized losses against realized gains and, where possible, ordinary income up to $3,000. The mistakes we see most often:

• Harvesting losses in a year with no gains and no plan to use the carryforward
• Triggering wash sales by buying the same security in an IRA within 30 days
• Forgetting that municipal bond losses still count

Done well, harvesting can reset cost basis on concentrated positions and fund a charitable gifting plan in the same move.

4. Bunch charitable giving through a donor-advised fund

Since the standard deduction nearly doubled in 2018, most households no longer itemize every year. The fix is bunching: combine two or three years of charitable giving into a single year, contribute appreciated stock (not cash) to a donor-advised fund, and grant from the fund over time.

For a Maryland household giving $20,000 per year to church and community, bunching three years into a single $60,000 DAF contribution of appreciated stock can:

• Eliminate the capital gain on the donated shares
• Push itemized deductions well over the standard deduction in the gift year
• Preserve the ability to give the same amount to the same charities over the next three years

5. Revisit Roth conversions in the November window

Roth conversions are the single most under-used tool for households between ages 55 and 72. The window between retirement and the start of required minimum distributions is short, and the math is unforgiving once RMDs begin stacking on Social Security and pension income.

We run conversions in November because we know the year's income with reasonable certainty. The decision is not "convert or don't" — it is "how much, up to which bracket, and which account."

6. Maryland-specific traps to check

• Pension exclusion: Maryland exempts a portion of pension income, but the exclusion phases out and interacts with Social Security taxation. A Roth conversion can inadvertently reduce the exclusion.
• Estate tax: Maryland is one of the few states with both an estate tax ($5M exemption) and an inheritance tax. Annual gifting and trust funding decisions should be made with both in mind.
• County piggyback tax: Local rates vary from 2.25% in Worcester County to 3.20% in several jurisdictions including Prince George's. A move across county lines mid-year changes the math.

7. Coordinate retirement contributions before payroll closes

• Max the 401(k): $23,000 base, $30,500 if age 50+
• Backdoor Roth: $7,000 / $8,000 if eligible
• Mega backdoor Roth: if the plan allows after-tax contributions and in-plan conversions
• HSA: $4,150 individual / $8,300 family, $1,000 catch-up at 55
• Solo 401(k) or SEP for self-employment income

Most payroll systems cut off the final 401(k) deferral in mid-December. Confirm the date.

8. Document, don't just decide

Every move above generates paperwork: DAF letters, conversion forms, beneficiary updates, gift documentation. The work is only as good as the records. Keep a single year-end file with confirmations, valuations, and a one-page summary your CPA can use in February.

The bigger point

No single move on this list is complicated. What is complicated is running them together, in the right order, with full awareness of the trust, the business, and next year's projection. That coordination is the job we do — and the reason households eventually stop running year-end in isolation.

If you would like a second set of eyes on your year-end picture, we offer a complimentary 30-minute strategy session. We will tell you what we see, whether or not we end up working together.