Year End Tax Ideas
For many of us, autumn is filled with outdoor activities and calendar planning for the upcoming holiday season. But far too often, we overlook and even neglect making critical decisions during this last quarter that can impact our personal financial situations, this year and for years to come.
As a full-service financial consultant, I can review your investments now and may be able to keep Uncle Sam from taking a bigger bite out of your income. There are a number of effective tax planning strategies that can save you money, while helping you further meet your financial goals.
Whenever you can time your income so it is taxed at lower rates or deploy assets in a manner that reduces your overall estate, you, and potentially your heirs, save money. While it is imperative that you always consult your tax advisor before implementing any tax planning strategy, here are a few ideas we may want to discuss.
Holiday gift ideas. You and your partner can each give up to $12,000 to the same person. Thus, you could give a child up to $24,000 a year without incurring a tax liability. And if you are a grandparent, what better way is there to show your affection for grandchildren than to give the gift of a good education. Contributions to 529 college savings plans can help you remove additional assets from your taxable estate and may offer state income tax deductions. (Limitations, restrictions and fees may apply.)
Make the most of capital gains and losses. If you have realized gains in your portfolio from investments that you have sold, think about reviewing your portfolio for any unrealized losses that may be appropriate to harvest or realize to offset gains. If you have realized losses, it may be advantageous to use a rebalancing opportunity to realize portfolio gains to offset any investment losses. Together, we can review your portfolio for any asset classes or investment styles that, due to appreciation, now represent too large a percentage of your total portfolio than is recommended based upon your risk tolerance.
Maximize tax-advantaged accounts. For those not yet age 70 ½ and perhaps for retirees enjoying a second career, you may still be able to benefit from funding qualified retirement plans or individual retirement accounts (Limitations, restrictions and fees may apply).
Ensure your bond portfolio is working hard. If you own fixed income bonds, now is a great time to take a closer look at your bond holdings to ensure you are positioned to take full advantage of the current market environment and aren’t overlooking opportunities to maximize your income or reduce taxes.
These are just a few of the tax saving strategies worth considering in order to help you reduce your tax bill. Not all tax planning strategies make sense for every taxpayer’s situation, and some strategies can be complicated. Consult with your tax advisor before taking action. Put yourself on track to make the most of tax savings!
This article is for informational purposes only and is not intended to provide specific advice to any individual. Consult your legal, tax, and/or financial advisor to determine what is appropriate for your situation.
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