Here are three strategies guaranteed to reduce your taxes this year, but you must act now if you want to reap the tax benefits before it’s too late.
1. Make a contribution to your IRA.
To pay less tax on your 2015 return, you have until April 15, 2016 to make a tax-deductible contribution to your traditional IRA. Why not start thinking about that now? Or even go ahead and make the contribution before year-end and get it off your To Do List.
2. Sell some investments and pay zero federal tax.
There are two ways to do this.
Believe it or not, it is possible to sell an investment at a profit, and pay zero long-term capital gains tax. It all depends on your income level and what tax bracket you’re in. TAKE NOTE: If you’re in the 10% or 15% tax bracket, you’ll pay zero long-term capital gains. Also: “Long-term” means you’ve owned the investment more than one year.
I know this sounds too good to be true – it’s one of the most overlooked tax breaks on the books. If the time is right to sell at a profit, take advantage of this opportunity!
Option #2. The other way to avoid tax on sale of investments is to offset gains and losses in the same year. You’ll need to do some number-crunching, so if you think you’re a candidate for this strategy, consult with your investment adviser or accountant.
3. Be charitable.
If you itemize deductions, now’s the time to prepare for any charitable contributions you’d like to make by December 31. Taking a deduction for a donation to a 501(c)3 organization is a wonderful thing! You get the tax-savings, and your favorite charity, church or other non-profit group gets the benefit.
Bonus Tip – Looking for more tax deductions?
To get your copy of the free Tax-Saving Guide,
“Top 10 Tax Deductions for Small Business Owners & Self-Employed People,”
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Brought to you by Wayne Davies, EA . . .
dedicated to helping you find more deductions and pay less tax.