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Deadline Fast Approaching for Seizing 2014 Tax Planning Opportunities


December is here and it’s time to think about how to lower your 2014 tax bill.  Here’s five ideas:

1. Pay attention to whether Congress extends some of the tax breaks that expired at the end of 2013.  There may be some opportunities that present themselves.

2. If you expect to be in the 15% tax bracket this year, you might consider harvesting some of your gains (like US stocks) as they are taxed at 0%!!  Remember, even the rich can be in the 15% tax bracket!

3. Use proceeds from tax gain harvesting to buy asset classes that haven’t done so well like commodities, oil, gold, foreign, and emerging markets.  Or use this as an opportunity to fill in bare spots in your portfolio – ie rebalancing.

4. If you have experienced losses from asset classes that have gotten clobbered this year, you may be able to tax-loss harvest and use the losses to offset future capital gains plus you can use up to $3,000/yr of losses to offset ordinary income until the losses are used up!  Any unused losses can be carried forward to future tax years.  You can also use the losses to offset any capital gains that have been realized this year due to a sale of a security.

5. For those collecting social security, watch your income – it could be the difference between paying taxes on 50% of your benefits rather than 85%.

Remember, if your financial advisor is not addressing these issues with you it might be time to hire a fee-only fiduciary who looks at how your financial decisions filter down to the tax return.  After all, who wants to pay Uncle Sam any more than they have to.



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