Consider strategies to take the bite out of the tax bill

Bill Cass, CFP®, CPWA®

Bill Cass, CFP®, CPWA®, 10/25/16

Consider strategies to take the bite out of the tax bill

There is still time for investors to implement tax-smart strategies before the close of the year.

As Chris Hennessey points out in his discussion of year-end tax planning, the first step is for investors to determine their tax bracket. This will serve as an important guide for choosing appropriate strategies for reducing taxable income.

Some year-end tax strategies to consider that may help mitigate the tax bill:

  • Delay income into the following year
  • Realize losses to offset capital gains
  • Conduct a Roth IRA conversion for investors in lower tax brackets
  • Push the payment of fourth-quarter state income and local real-estate taxes into the following year, in instances where the alternative minimum tax bracket precludes investors from taking certain deductions
  • Use flexible spending account funds before year-end
When implementing these strategies, it is critical for investors to work with a financial advisor and tax professional.