The Holidays are upon us. Soon trees will be on sidewalks, decorations packed up and put away, and taxes will be due. A lot of people do their tax planning after the first of the year, but now is the time to plan. If you have any undiscovered opportunities to save on taxes, action must be taken now. Action taken after the first of the year will be next to impossible to utilize. It will be a lost opportunity.
Like most of my clients, I am not a tax expert. For the best advice, I look to my Certified Public Accountant (CPA) Bill Hanlin of Hanlin Moss. Joining me “On The Money” last Friday, Bill and I explored some of the tax saving options available. Here are some to think about:
Taking Prior Year Losses
During the Great Recession, a lot of us took really heavy hits. Utilizing those losses now can maximize our current gains. Up to $3000 a year of losses can be used to pay no tax on gains. However, many people forget unused losses from prior years can be used currently to pay no tax on gains from the current year.
Before December 31 – Utilizing Sales Tax Write Offs
The Congressional Election isn’t until November of 2012, but Congress has been known to change laws at the last minute and make them retroactive to the first of the year. To ensure you can write off your sales tax, purchases must be made before December 31.
More Then 30 Days Before December 31
(Please note, it is a too late to utilize this option now. But, I want you to be aware of this potential gain next year.)
For stocks that are down, but which you feel are extremely valuable and will go back up, you can double the position. After 31 plus days, you can sell the original position and take the tax loss. This is especially helpful for short-term losses when you expect to hold the stock for a long-term gain; you will be able to deduct at ordinary income rates and take the gain at capital gain rates.
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I want to hear your opinions; please leave a comment below and let me know your thoughts.