Year End Planning – It’s Not Too Late . . . Yet
December 1, 2011
Year end is soon approaching. As you sit down for your holiday dinner, remember that soon Uncle Sam will be visiting you to enjoy his share of your bounty. Despite the hustle and bustle of the holidays, the savvy taxpayer will make room in their overstuffed holiday calendar to complete year end tax planning. Of course, it would be best to take steps to minimize taxes all year. Fortunately, if you have failed to do so, there are still some options that can be utilized before year end.
If your taxable income needs to be offset, you should consider selling assets that have lost value before the end of the year. Losses will offset gains, and to the extent that the losses are greater than the gains, you may be able to write off the losses against your income this year and in future years. If you are holding an asset that in all likelihood will not go up in value, consider a sale at a loss, which may, in turn, reduce taxable income.
Often, taxpayers make additional charitable contributions in order to obtain additional write-offs against their income. An additional write-off is only available if you qualify to itemize deductions. In order to itemize your deductions, you must have deductions that exceed the standard deduction for the tax year. If you are unsure whether your itemized deductions will exceed the standard deduction, it makes sense to calculate your deductions prior to making any additional contributions to ensure that the contributions will have the desired effect on your income tax return. If additional charitable contributions would reduce your income tax, it is not necessary to make a cash donation. You can donate tangible items of personal property – automobiles, clothing, household furnishings and the like – to various charities. Your attic and basement could be filled with tax write-offs. …
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by: Gina M. Barry