Tax Cutting Strategies for Year-End

Tis the season to do some year-end tax planning and possibly slash your tax bill. I am not an accountant, nor do I practice accounting but there are a few tips I picked up over the years that may make a difference in your income tax bill next year. As always I suggest you discuss any and all tax related questions with your tax professional. 

1. Now is an excellent time to sell off both stock and mutual fund winners and losers. Lock in gains with stocks that have made you money and get preferential tax treatment and cull your losers and get losses moving forward. This is a great maneuver if you think you are going to be changing investment strategies in 2011. 
2. No matter if you’re selling winners or losers make sure you have the cost basis for all your investments. Waiting until next March-April will not give you enough time to get numbers from various fund and brokerage firms.
3. Bulk up your 401k-403b retirement plan if you haven’t already. Check and see what you need to add to max out your contribution and get it done before the end of December. 
4. Talk to your boss and see if you can push income into 2011 instead of getting paid this year. If you work for a small firm the boss may appreciate your generosity.
5. Make a charitable deduction. This is the time when charities need you and you need them.  Don’t forget to get receipts.
6. Required Minimum Distribution from your IRA or if you inherited an IRA – make sure that you take the required amount for 2010. The IRS allowed participants to skip 2009 but the RMD is back in 2010. The penalty is severe- 5o% of the amount required to be withdrawn.
7. Any tax deductions coming due in January write the checks in December for this year. This includes mortgages with interest deductibility, taxes on property and business expenses. 

That’s it-only seven but if a nudge got you thinking and you did just one it could save you a lot of tax dollars. For more ideas call your tax professional.

Questions call Paul @ 877 783 7080 or write him at pstanley@westminsterfinancial.com. Share this blog with someone who cares about their money.