Holidays and taxes are the perfect package, right? OK, maybe not.
But with all the seasonal festivities to distract us, it’s easy to put off making some tax moves that could help cut your 2009 IRS bill or reduce your 2010 tax liability.
Well, Don’t Mess With Taxes wants to help.
No, we can’t suggest the perfect gift for your mother-in-law or the right outfits for all your holiday parties. But we can provide you a daily tax tip, starting today and running through Christmas Eve.
Let’s get to it!
#1: Sell assets: Watching an investment tank is no fun, but you can at least get some relief from asset losers on your tax return.
If you have any capital gains, use the losses you took on your dog holdings to offset some of those gains.
If you have more losers than winners, get a new investment adviser. Then use up to $3,000 of that overage to reduce your ordinary income.
Some folks also might want to sell investments that have done well because they fear that the capital gains rates will be hiked before the scheduled 2011 increase.
Personally, I don’t think that’s going to happen. There’s at least an implicit contract with taxpayers that Dubya’s tax cuts will be allowed to play themselves out while the economy is trying to recover.
Plus, 2010 is an election year. I just can’t see Representatives and Senators who want to stay on Capitol Hill making a change in the capital gains rates right before folks head to the polls.
But I have talked to financial advisers who say that some of their clients are taking their gains now to lock in the 15 percent rate.
If you’re of that mindset, too, then you still have a few weeks to sell your stocks.
Whatever your motivation, be it to lock in lower rates on gains or harvest some losses, make sure you get the deal done by the rapidly approaching Dec. 31.
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