Year-End Tax Planning 2015
Guide to Tax Planning for 2015 – Year End
With the 2015 year coming to a quick close, it’s time to do some year-end tax planning. Specifically, I am referring to your investment portfolio centered around your regular taxable accounts.
If you are over 70 ½ year old or older, do not forget to review your required minimum distributions (RMDs) if you have any qualified retirement accounts such as IRAs and 401k plans with your former employers.
The exception to the rule is any Roth IRA accounts you may have as these qualified accounts are tax-free and do not require any distributions.
This is a good time to review your investment portfolio and eliminate (sell) any of your stocks, exchange traded funds and mutual funds for securities that are underperforming compared to their peers.
Tax losses can offset your gains which in turn will reduce the amount of tax you will have to pay; short-losses (securities that are held one year or less) can reduce short-term gains. Long-term losses (held longer than one year) offset long-term gains.
Long-term Gains are taxed at a favorable tax rate compared to short-term. The current max rate for long-term gains is 15 %.
The above process is called tax loss harvesting which simply means offsetting your gains with your losses.
If after you tally your gains and losses, you find you have a net loss; that loss can offset ordinary income up to $3,000 and any loss amount over that is carried forward to the following years until the total tax loss is reduce to zero.
It’s to your advantage to keep good records as to your purchases and sales, along with cost basis of your securities.
Interest and dividends are reported on schedule B; capital gains and losses are reported on schedule D.
Seek professional help if you find competing the forms are confusing to avoid making any costly mistakes.
Enjoy your holiday…..
Daniel F Iuculano, AAMS CMFC
Accredited Asset Management Specialist
Chartered Mutual Fund Counselor
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