You still have time to put yourself in the best tax position possible before the clock strikes midnight on New Year’s Eve. Follow these five tips and you won’t be sorry when tax season rolls around.
- Make a late-year charitable donation. Even better, make the donation with appreciated stock. You can often receive the higher-value donation without paying capital gains.
- Take any required minimum distributions (RMDs) needed. Retirement account RMDs are due by Dec. 31 of each year after you turn age 70½. Otherwise, you may face a hefty penalty – up to 50 percent of the amount that should have been withdrawn, on top of the regular tax that is due.
- Give gifts to your loved ones. You and your spouse can give up to $14,000 each to as many individuals as you’d like without tax consequences in 2017.
- Solidify your tax status. If a wedding or divorce is in your year-end plans, know that your marital status as of Dec. 31 determines your tax status for the entire year. Changing the dates of an end-of-year event may save in taxes.
- Take any final investment gains and losses. Net your capital losses against your higher-taxed ordinary income whenever possible. You can also deduct up to $3,000 in capital losses against ordinary income each year.
Holiday donation reminder: Remember, there are better ways to donate than to put cash in the kettle while you’re out shopping this holiday season. Writing a check is a much better idea as cash donations aren’t tax-deductible without a receipt, canceled check or statement, which a bell ringer in a Santa suit probably won’t provide.
