There are only a couple of weeks left in 2013. It may seem impossible —that the year has flown by too quickly— but the calendar doesn’t lie. Here are seven things to consider doing before the year’s over to possibly reduce your 2013 tax burden.
1. Sell stocks with losses. If you have an investment that’s a loss for you right now and you don’t think it’s going to come back, you might want to sell it in order to write the loss off against other investment income. Remember to be considerate of wash sale rules, which state that in order to get the deduction, you can’t buy a “substantially similar” position in the 30 days before or after the sale.
2. Hold off on selling stock that’s increased in value. If you want to avoid paying taxes on your gains, wait until the calendar turns and January 1, 2014 rolls around before you sell any stock or other investments with gains.
3. Pay certain expenses. If you have any expenses that can result in a tax deduction, such as property or estimated taxes, don’t wait until 2014 to pay them if you can use the deduction in 2013.
4. Pay for classes. If you’re planning to take any classes in college during the 2014 spring session, make sure you’re enrolled and your classes are paid for by the end of December. That way, you can take advantage of the American Opportunity or Lifetime Learning tax credits for 2013 (assuming you haven’t already maxed these credits out).
5. Think about donating to charity. If you itemize your deductions, then now’s a great time to add in a few last-minute charitable contributions for 2013. If you want to give your favorite charity an extra bump, you might talk to human resources to see if your employer matches contributions.
6. Go to the doctor. Wait—this is a post about end-of-the-year tax planning, not medical treatment, right? Okay, that’s true, but if you itemize your deductions, you may qualify for medical expense deductions for the treatment you pay for in 2013, which could make an extra trip to the doctor worth its weight in stethoscopes.
7. Don’t take that last distribution. If you’re planning on taking a distribution from your Traditional IRA or other taxable distribution this month, you might consider holding off a few weeks so that you don’t have that added tax burden in 2013.
At Kramer Wealth Managers, we want to help make tax time simple and stress-free. Contact us today to find out how we can help you better manage your tax burden in 2014.
This material is intended for informational purposes only and should only be relied upon when coordinated with individual professional advice. Neither FSC Securities Corporation nor its representatives offer tax or legal advice. For assistance with these matters, please consult your tax or legal advisor.