Shopping Cart
Your Cart is Empty
There was an error with PayPalClick here to try again
CelebrateThank you for your business!You should be receiving an order confirmation from Paypal shortly.Exit Shopping Cart

BlackStar Investments

Tax and Financial Services

My Blog


Year-end tax tips to maximize your money

Posted on December 19, 2011 at 8:02 PM
Good year for gifting
But there is some uncertainty around estate planning, Duggan said. Here’s why: When the congressional supercommittee in November was working to cut the government’s deficit, rumors swirled that the committee would slash the current $5 million lifetime gift-tax exclusion, currently in place through 2012. While the supercommittee failed to come to agreement, the possibility lingers that lawmakers might tinker with that exemption in 2012. That means high-net-worth taxpayers who haven’t yet devised estate plans to maximize that benefit should act sooner rather than later.
“I am recommending to clients, to the extent their intent is to use the provision anyway, it may be prudent to use it this year versus next year,” Duggan said. “We at least have certainty this year.”
It’s not too late to give cash or property this year, though the giver must provide the IRS with a formal appraisal of the property, he said. “We have plenty of clients who review the assets with an appraiser,” even though the documents don’t come until January.
Maximize tax breaks
Traditional year-end planning generally means bunching your deductions into the current year — paying next year’s property-tax bill in December, for instance — and pushing income into the following year, if possible. Basically, do what you can to reduce your current-year tax hit.
Business owners, too, should consider maximizing deductions. “Take an inventory of what you expect to purchase in the first couple months of the following year,” Duggan said. “If you know with relative certainty what those purchases might be, there’s nothing wrong with prepaying them in December.”
Alternatively, he said, “If the owner has the ability to defer billings for a month, that’s another way to reduce income in the current year.”
Whether a business owner or employee, another way to make the most of tax breaks at year-end: Try to max out contributions to your retirement plan. And consider a Roth IRA, said Allison Shipley, a principal with PricewaterhouseCooper’s private company practice.
Starting in 2010, the income limits were removed on Roth conversions. Now anybody can elect to convert a pre-tax IRA to a Roth IRA. “We’ve found generally that converting to a Roth makes a lot of sense if you don’t think you’re going to need the money during your lifetime and you intend to leave it to your heirs,” Shipley said.
Even those who will need the money in their lifetime might consider a Roth, if only because income-tax rates may be higher when they retire. Roth IRA may be in your future
A Roth IRA “can provide you some tax-free income later on,” said Tim Courtney, chief investment officer with Burns Advisory Group in Oklahoma City, Okla.
You must pay ordinary income tax on the money you convert. But doing that this year or next makes sense, given that tax rates are slated to rise when the Bush-era cuts expire at the end of 2012.
Tax breaks set to expire
A valuable tax perk that lets people age 70 1/2 or older donate from their traditional IRA to a charity ends this month, unless Congress opts to extend it. Eligible taxpayers can donate up to $100,000 without recognizing that distribution as income. And that money still counts as a required minimum distribution from the IRA. The donation is not tax-deductible, however.
If you’re not eligible for that perk, now is still a good time to donate — not only does it help the charity at a crucial time of year, but it also lets itemizers ramp up the value of their deductions.
Also, if you make certain energy-efficient home improvements, you might be able to claim a tax credit for part of the cost. But hurry: those credits end this year. Go green before tax credits expire
And teachers, this may be your last chance to take advantage of the above-the-line deduction for school supplies: you can deduct up to $250 for out-of-pocket costs, but that tax perk is set to expire, too, unless Congress intervenes.
Make the most of stock gains — and losses
Another way to give: Donate to your favorite charity stock that has gained in value since you purchased it (and that you’ve held more than a year). That way you avoid capital-gains tax on the increase in value, and generally you can claim a charitable-contribution deduction for the fair-market value of the stock on the day you donate it.
If you want to donate shares that have lost value, sell them first so you can claim the tax loss, and then donate the money.
Even if you don’t plan to donate the proceeds, don’t forget to make the most of your stock losses. Think of them as a tax asset, Courtney said.
Losses are like “a get-out-of-jail-free card for the future,” Courtney said. You can offset your capital gains, and up to $3,000 in ordinary income, plus carry additional losses forward to future years.
Say you own a stock that’s taken off, and you want to rebalance. “A lot of people say, ‘I need to rebalance and get back to my original allocation, but I can’t because if I sell it I’m going to have this huge taxable gain, but if you booked your losses earlier when the market was down, you’d have a loss carry-forward that you can use to offset that gain,” he said.
Don’t forget to mind the wash-sale rule: If you exit an asset, wait 30 days before re-investing in the same stock, or you lose your ability to harvest the losses. Consider investing in a similar investment. “It just can’t be the exact same investment,” Courtney said.
Don’t forget the AMT
The alternative minimum tax turns traditional year-end strategies on their head, for the most part, since many deductions are unavailable to taxpayers who fall into this parallel tax.
“If I have a client who is going to be in AMT in 2011, for example, and they haven’t paid their property taxes yet and they have the ability to defer the payment to 2012, it might be good to defer,” Shipley said. Otherwise, they lose the benefit of that deduction. “If they defer making that payment until 2012, they might not be in AMT next year.”
And that traditional year-end strategy, for those not in the AMT? Keep in mind that may not be a smart move come year-end 2012. At the end of that year, the Bush-era income-tax rates and lower rates on capital gains are set to expire.
If you think Congress will let the tax code revert to higher rates, you’ll want to pull income into 2012, from 2013, and push deductions out, as much as possible. Of course, that’s still a big “if.”

Categories: Tax Topics

Post a Comment


Oops, you forgot something.


The words you entered did not match the given text. Please try again.


Reply college essay writer
4:37 PM on September 21, 2018 
Basically this blackstarinvestment site has been giving us about agreement and property tips and essential college writing topics. The more money deductions and preparing the better income choice.
Reply bestessays
6:40 AM on April 5, 2019 
All the departments in every country are running with taxes we pay to government. It shows the value of our tax which we pay because the system of every country is running smoothly with our taxes. People who conceal their wealth from govt don't pay enough tax which is very bad thinking from them.
Reply JN0-1101 exam dumps
10:31 AM on May 11, 2019 
Ace4sure is the website that deals in preparation material for the exam for many years. According to my exposure and research, this is the right platform where you can get exact exam dumps.
Reply q
3:11 AM on May 27, 2019 
4:51 AM on May 31, 2019 
Preparing year-end taxes is not something that any body is looking forward to doing. But there are many different techniques at your disposal to make sure your tax bill is no more than it has to be. Something that is easy to watch out for is the various tax breaks that you might be entitled to. Examples are medical expenses and property taxes. Even with the approval of the Tax Cuts and Jobs Act that simplified the way Americans are doing their taxes, there are still ways to reduce your tax bill, including maximizing your retirement savings, bundling charitable donations and making an extra mortgage payment.
Reply tableclothsfactory
9:38 AM on May 31, 2019 
Year-end tax tips to maximize your money
Reply wholesale eyelashes
7:52 AM on June 4, 2019 
Year-end tax tips to maximize your money
Reply wedding stubby holders australia
4:07 AM on June 6, 2019 
Year-end tax tips to maximize your money
5:50 AM on June 9, 2019 
Reply custom essay uk
2:41 AM on June 17, 2019 
I have to say that the tips that you have given above will surely help me with the money that I will be receiving. I am actually still new with financial management so I do need some articles such as the one that you have shared to make myself knowledgeable about it. I know that I will struggle at first but with the help of your tips and the other information that I was able to gather from the other sites I have already visited, then I believe everything will be fine. Thank you so much for helping me. I will surely take note of what I have learned here.
Reply iphone 8 plus cases
3:04 AM on June 23, 2019 
Year-end tax tips to maximize your money
Reply beyondtheshore
6:33 AM on July 4, 2019 
Year-end tax tips to maximize your money
Reply things to do
10:25 AM on August 1, 2019 
I really loved reading your blog. It was very well authored and easy to undertand. Unlike additional blogs I have read which are really not tht good. I also found your posts very interesting. In fact after reading. I had to go show it to my friend and he ejoyed it as well!
Reply Sciatica Pain Frankfort
7:17 AM on September 14, 2019 
Totally agree with your insights. In today's internet generation, the only way to get an edge in the market out there is to be visible using any other techniques know to men to be able to get the connection in the online community
Reply insta stalker
9:46 AM on October 11, 2019 
Your article is such an informative article. It is glad to read such those articles. Thanks for sharing. With my site we can download free many nice photos on instagram
Reply property management companies in medford oregon
7:48 PM on October 15, 2019 
This is a shrewd online journal. I would not joke about this. You have such a great amount of information about this issue, thus much energy. You likewise know how to make individuals rally behind it, clearly from the reactions.
Reply telescope for beginners
4:06 PM on January 15, 2020 
year end text term is a good blog. . This is very informative and interesting. Thanks for share this blog with me.
Reply Useless Websites
10:25 AM on February 4, 2020 
Year-end tax tips to maximize your money
Reply Eyal Nachum
10:53 AM on March 11, 2020 
Eyal Nachum is a fintech guru and a director at Bruc Bond. Eyal is the architect of the software that SMEs use to do cross-border payments.
Reply Eyal Nachum
11:22 AM on March 12, 2020 
Eyal Nachum is a fintech guru and a director at Bruc Bond. Eyal is the architect of the software that SMEs use to do cross-border payments.