How to Prepare for Taxes at the End of the Year

Year-End Tax Planning Tips

Here are some tips to help you lessen your tax burden at the end of the year.

1. Stay Informed About Upcoming Tax Law Changes

First, be aware of any tax changes that will take place in the new year so you can use them to your advantage.

2. Review Your Cost Basis Before Selling Assets

Review your cost basis so you can make informed decisions about the sale of your assets.

3. Realign Your Portfolio for Better After-Tax Returns

Realign your portfolio for the best overall after-tax return.

4. Use Tax-Loss Harvesting to Offset Gains

Accelerate losses to offset gains with tax-loss harvesting. You can take up to a loss of $3,000 in excess of gains each year, but avoid wash sale rules, or you may want to consider a delay in using loss carryover if your bracket will be higher the next year.

5. Manage Income and Deductions to Stay in Your Tax Bracket

Be aware of additional taxable income available yet. Stay within your current tax bracket. Consider either accelerating or delaying deductions to arrive at the best tax strategy for you.

6. Prepay State and Property Taxes Strategically

Consider paying state estimated and real estate tax installments early if it works to your advantage.

Work With a Professional for Year-End Tax Strategy

Tax and financial planning involve complex calculations, so seek a professional to maximize your overall tax strategies.