Regardless of the tax law proposals swirling around Washington, October through December is an excellent time to consider year-end tax planning moves to save taxes for 2017.
What are some tax strategies to keep our investment house in order?
- Don’t buy the dividend: Be careful about when you buy a mutual fund in this season – mutual funds often distribute income and capital gains sometimes surprising unwary new investors.
- Tax loss harvesting: cull the dogs? Consider selling investments at a loss to offset realized capital gains or some ordinary income.
- Rebalance: Manage your risk in a tax-aware manner but don’t neglect to rebalance back to your risk comfort zone.
Do we still have time to use our retirement accounts to reduce taxes?
Absolutely. Between now and year-end, bump your 401(k) or IRA retirement contributions:
- IRA contribution limits: $5,500 to $6,500 (tax deductibility varies according to individual circumstances).
- 401(k) contribution limits: $18,000 to $24,000.
Other tax planning tips:
If you itemize, make charitable contributions (to qualified charities):
- Donate: Clean out your closet and garage.
- Support: Disaster relief funds.
- IRA: The IRS permits individuals age 70½ or older to make charitable gifts directly from their IRAs.
Back of the napkin — check your expected tax due: Avoid tax underpayment penalties.
Fully fund Health Savings Account, (Self-only is $3,400, family coverage is $6,750, and $1,000 catch-up contributions are allowed for age 55 or older.)