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If you think about taxes now, you will have more options


The fourth quarter of the year is always a good time to start thinking about ways to minimize your tax burden.  Why now? Some of the financial moves you can make have to be done in the calendar year and others might require a couple of months to complete.  
 
If you itemize your deductions, what are a few good strategies?
The first is to be generous. Donating cash to charities serves two important purposes. Most charities really need the help during the upcoming holidays. The benefit to you is that it will help boost your deductions that you can claim lowering your tax burden.
 
Is there another strategy for those who itemize?
Yes, the second strategy is to give it away. What I mean by that is donate unneeded clothing, electronics, sporting goods, even cars. Just be sure to accurately value the items when you itemize your deduction. This is a great way to declutter your closet and your storage area while doing something good.
 
What is something that everyone can do to lower taxes?
Hitting all of your maximum contributions to health savings accounts and flexible spending accounts. Since these accounts are funded with pre-tax dollars it provides a great tax benefit.  Just be certain that you will use all of the money in your flexible savings account before the end of the year.
 
Are there other contribution maximums that are important to reach?
Two of the most important would be 401k and 529 plans. Both can provide excellent tax benefits and both need to be funded by the end of the calendar year. Additionally, if you meet certain restrictions, you might be eligible for catchup contributions to 401k plans. If that is true, you should definitely start now to attempt to reach the higher contribution limit.
 
What other financial moves might be good for tax benefits?
One that you definitely want to discuss with your advisors is the concept of tax loss harvesting from your investments. If you have investments that have lost value and others that have a high return, now might be the time to sell if you can reap a tax benefit. Your financial advisor will have the answers for your unique situation.
 
Is there any advice for people who are considering any of these strategies?
The most important is to talk to a tax professional or financial advisor who can dig into your individual situation. The second most important advice is that you need to document and retain records for all of these transactions so you can accurately complete your taxes next year. Good record keeping is critical for accurate tax filing.
 


Posted: 10/6/2017 with 0 comments

Categories: Charities, Investments, Money Matters, Planning, Taxes



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