Take advantage of smart year-end financial moves that can help reduce your income tax liability when you file next spring. Here are a few tips from my CPA.
1. Donate to qualified charities and organizations
You can generally deduct contributions of up to 50 percent of your adjusted gross income to qualified charities and organizations if they’re made before December 31. Consider:
- Donate stock. You can generally deduct the fair market value of donated stock.
2. Contribute to your 401(k)
Before the end of the year add pre-tax money to your 401(k) to reduce your taxable income.
3. Sell losing stock
Sell "losing stocks" before the year’s end to deduct the capital loss against the capital gains you have realized, reduce your taxes on money earned from your successful stocks. After you offset your capital gains, as an individual, you can generally use any excess losses to reduce ordinary income up to the annual $3,000 limit.
4. Focus on long-term capital gains
“A short-term capital gain" is a stock or mutual fund you’ve bought and sold in less than one year,”. Long-term capital gains are taxed at fixed interest rates. Evaluate your financial portfolio to shift more funds into investments that offer long-term tax savings.
5. Fund an education savings account
Many states allow residents to deduct contributions made to an educational savings accounts, some types of accounts allow you to withdraw the money tax-free for education expenses.
If you want more detailed information please consult with a CPA or Tax attorney. We are NOT tax advisers, we are simply sharing information about potential ways to save money. If you want tips on buying or selling a home call us, Austin Home Girls Realty. We would love to help you find your dream home!
Cheers & Happy Holidays!
Betina Foreman- Realtor, C.N.E.
Austin Home Girls Realty
1601 W. 6th Street
Austin, Texas 78703