Four year-end tax strategies to consider

It’s hard to believe we’re fast approaching the end of 2019, but it’s true. Here are four things to consider as you weigh potential tax moves between now and the end of the year. 1. Be smart about your charitable giving If you’re already inclined to donate to charity, then consider donating appreciated securities rather than cash to your favorite charity or to a donor advised fund. Donors who can afford to put away more than $100,000 may want to consider starting a charitable lead trust (CLT). Charitable lead trusts are designed to provide income payments to at least one qualified charitable organization for a period measured by a fixed term of years, the lives of one or more individuals, or a combination of the two; after that, trust assets are paid to either the grantor or to one or more noncharitable beneficiaries named in the trust instrument. 2. Maximize retirement savings Deductible contributions to a traditional IRA and pre-tax contributions to an employer-sponsored retirement plan such as a 401(k) can reduce your taxable income. If you haven’t already contributed the maximum amount allowed, consider doing so by year-end. If you’re a business owner, consider opening a traditional 401(k) profit

December 10, 2019 No Comments

2016 Year-End Financial Planning Basics

As we end the year, it’s time for some housekeeping tasks such as updating your beneficiary information for retirement accounts or other investment accounts. Plus, the window of opportunity for many tax-saving measures ends on December 31. There’s still time to affect your bottom line for the 2016 tax year, but you need to act quickly. Here’s a roundup of some key concepts you may want to act on as we approach the end of the year. Timing is everything If there’s a chance you’ll be in a lower income tax bracket next year, consider deferring income to 2017. That could mean delaying a bonus, rental income, or payment for your services. Doing so may not only allow you to postpone paying tax on the income, but ultimately your tax bill may be lower. Similarly, you may want to accelerate deductions into 2016. If you itemize deductions, you might accelerate some deductible expenses like medical expenses or state and local taxes by making payments before the end of the year. Or you might consider making next year’s charitable contribution this year instead. Some clients will find it better to do just the opposite: accelerate income into 2016 and postpone your

December 5, 2016 No Comments

Four year-end tax strategies to consider

It’s hard to believe we’re fast approaching the end of 2015, but it’s time to start thinking about the 2015 tax season. Here are four simple yet effective tax minimization strategies to consider before the end of the year: 1. Harvest capital losses. While the recent market volatility has been frustrating, it does provide opportunities to realize capital losses. With high-income taxpayers facing federal income taxes of up to 23.8% on long-term capital gains, harvesting losses can be an effective way to increase after-tax returns. Before the end of the year, offset gains in your portfolio by selling securities with losses. Be careful to avoid the “wash-sale” rule, which doesn’t allow you to claim losses when you buy replacement securities either before or after you sell substantially identical securities. 2. Contribute appreciated securities to charities. Donating appreciated securities (held for at least a year) to charity can be a great way to minimize your taxes. You will receive a deduction for the fair market value of the security on your taxes. You’ll avoid paying capital gains tax on that security and the value of your contribution will be enhanced because the charity (as a tax-exempt organization) will also avoid paying

December 2, 2015 No Comments

The benefits of tax planning

Taxes can take a big bite out of your total investment returns, so it’s helpful to look for tax- advantaged strategies when building your portfolio. You don’t want to pay any more in tax than you have to. That means taking advantage of every strategy, deduction, and credit that you are entitled to. Tax-deferred and tax-free investments Tax deferral is the process of delaying, until a future year, the payment of taxes on income you earn in the current year. For example, the money you contribute to a retirement account (such as a 401(k) or deductible IRA) isn’t taxed until you withdraw it, which might be 30 or 40 years down the road! Any earnings the account generates are also allowed to grow tax-free. This can be very beneficial because the money you would have spent on taxes remains invested and for your own benefit. In the early years of an investment, the benefit of compound growth may not be very significant. But as the years go by, the long-term boost to your total returns can be dramatic. Tax deferred is not the same thing as tax free. Tax deferred means that the payment of taxes is delayed, while tax

April 8, 2014 No Comments