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Year End Tax Tips
As the end of the year approaches it’s a good time to look over your finances and see if you can take action to realize tax savings. The basic strategy for year-end planning is to time your income so that it will be taxed at a lower rate and time your deductible expenses so that they may be claimed in years when you are in a higher tax bracket.
Here are some useful tips:
If you have realized capital gains this year consider selling other investments that may generate a capital loss to offset the gain.
Consider selling only assets held for more than 12 months to lower capital gains tax.
Consider structuring the sale of investment property as an installment sale in order to defer gains to later years.
Set up IRA’s, Spousal IRA’s or IRA’s for children with earned income. Make maximum deductible contributions.
Make your early Jan. mortgage payment (due no later than Jan. 15) in Dec. so you can deduct the interest paid in the current year.
Make charitable donations (appreciated stock, cash, or even old clothes) before the end of the year. Keep your receipts.
Take advantage of Flexible Spending accts., Archer Medical Spending Accounts, and Cafeteria plans.
Consider delaying the collection of any debts that you are owed.
Consider deferring compensation year-end bonuses and delaying the exercise of incentive stock options.
Increase your 401k contributions or establish a company retirement plan if you do not already have one.
Maximize the use of itemized miscellaneous expenses and/or medical expenses by bunching such expenses in the same year, to the extent possible, to meet the threshold percentage of your adjusted gross income.
Dan Ciez
Financial Advisor – Waddell & Reed, Jacksonville
Media Contact: Ron Whittington (904-563-0402)
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