End of Year Tax Planning

End of year income tax planning can go a long way in reducing overall tax liability.  Consider the following:

  1. Pay state income tax estimates before 12/31 (even though not due until 1/15)
  2. Pay property tax bills before 12/31
  3. Rebalance investment portfolios by 12/31 and recognize loss positions
  4. Contribute to IRAs and education accounts (e.g., Section 529 College Savings Plans).  Depending on the plan type, you may have until 4/15 to contribute
  5. Defer income such as sale of stocks and property having gains until 1/1.  Consider a “like-kind” exchange for any property sale resulting in capital gain
  6. For small business owners, consider delaying collection on outstanding receivables until 1/1
  7. For small business owners, consider purchasing needed items before 12/31.  Remember, purchasing items unnecessary to the business is never good tax planning!

 

 

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