Based on current tax rules, the following tips can help you save tax dollars if you act before year-end. While not all actions will apply in every taxpayer’s particular situation, you’ll likely benefit from many of them.
1. Realize losses on stock, while substantially preserving your investment position. There are several ways this can be done. For example, you can sell the original holding, then buy back the same securities at least 31 days later. 2. Postpone income until 2017 and accelerate deductions into 2016. This strategy may enable you to claim larger deductions, credits and other tax breaks for 2016 that are phased out over varying levels of adjusted gross income. Note: In some cases, it may pay to actually accelerate income into 2016. For example, this may be the case if an individual’s marginal tax rate is much lower this year than it will be next year or if lower income in 2017 will result in a higher 2017 tax credit for an individual who plans to purchase health insurance on a health exchange and is eligible for a premium assistance credit. 3. Consider converting traditional-IRA money invested in beaten-down stocks (or mutual funds) into a Roth IRA, if you’re eligible to do so. Keep in mind, however, that such a conversion will increase your AGI for 2016. 4. Re-characterize the conversion of a traditional IRA to a Roth IRA. If you converted assets in a traditional IRA to a Roth IRA earlier in the year and the assets in the Roth IRA account declined in value, you could wind up paying a higher tax than is necessary if you leave things as is. You can back out of the transaction by re-characterizing the conversion—that is, by transferring the converted amount (plus earnings or minus losses) from the Roth IRA back to a traditional IRA via a trustee-to-trustee transfer. You can later reconvert to a Roth IRA. Read Entire Article: http://www.accountingtoday.com/opinion/2016-year-end-tax-saving-tips-for-individuals Comments are closed.
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September 2017
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