Tax-planning season gets under way

Consider donations, remember the high tab under the Tax Relief Act, and get yourself in to an adviser if you have one

Nov 17, 2014 @ 12:01 am EST

The next eight weeks are critical for investors, because it is the time when year-end tax planning takes place.

Unfortunately, tax planning time occurs amid one of the busiest periods of the year — holiday season, and all the shopping, travel and entertaining it involves. So it can be hard to stop long enough to draw up and embrace a plan to minimize your tax burden.

If you have a financial adviser, and especially if you are a higher-income person -- a single with taxable income of more than $200,000 a year, or married couple earning more than $250,000 a year — it could be time to come in for tax planning sessions. It's time for a reminder of some of the tax increases imposed by the American Tax Relief Act of 2012.


For example, those with taxable income of more than the $200,000 and $250,000 thresholds face a 3.8% surtax on the lesser of income over those amounts or net investment income, a 0.9% Medicare tax on wages over the thresholds, and a phasing out of personal exemptions and itemized deductions.

People with taxable income of over $400,000 a year face higher marginal income tax rates, higher long-term capital gain rates, and the loss of deductions and exemptions.

Ask your adviser or investigate all the available steps to minimize the income tax burden — for example, selling some losing stocks to harvest capital losses to offset capital gains, even though you might be reluctant to take losses on stocks they feel are certain to come back.

Consider donating some appreciated assets to charities for deductions to offset taxes.

5 Year-End Tax Strategies To Put In Place Now

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