SIMPLE AND EASY STRATEGIES TO SAVE ON TAXES AND BENEFIT YOUR FAMILY AS THE YEAR ENDS

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Here are some simple and easy to implement strategies that could save you some taxes and benefit you and your family as 2021 nears an end and we get ready to swim into a new year.

Harvest your tax losses from investments held in a taxable account:

We’re sorry for your loss, but you can make the most of it by selling and taking a tax deduction. Bonds and bond mutual funds and some stocks haven’t done well this year, and you may have some losses. You can use an unlimited amount of losses to offset taxable gains. You can usually deduct up to $3,000 in additional losses from your income and carry forward the remaining amount to future years. Wait at least 31 days to buy your losing investment back; if you don't, the IRS will disallow that loss and consider it a tax-wash sale.

Harvest your tax losses from investments held in a taxable account:

If you’ve held your investment for more than one year, you pay a long-term capital gains tax if you sell it out-right. But if you give the shares of appreciated stock or mutual funds to a qualified 501c3 charity there is no income tax paid upon the gift or when the charity sells the shares, and you get a tax deduction for the value of the shares at the time of the gift.

Like the investment and want to keep a position in it after the gift? Use some cash to buy it back and your tax basis will be reset to the new market value you re-purchase it for.

Want to trade some volatile stocks for stability and a guaranteed income? Give the stocks to a charity through either a Charitable Gift Annuity or Charitable Remainder Trust and get all the benefits described above along with a guaranteed income stream to you.

Support your favorite charity – like the Henry’s Fork Foundation:

Some people will take the standard deduction on their tax return, so they won’t itemize their deductions. But for 2021 you can still claim a deduction as part of the CARES Act. That amounts to up to $600 for married people filing jointly and $300 for those of other filing statuses.

Another powerful way to beat income taxes is for those over age 70 1/2 is to make a direct contribution from an IRA to a charity. You won’t owe taxes on the amount you withdraw and give to charity, and it can count towards your IRS required minimum distribution (RMD).

For more information on these ideas please contact Gordon L. Nelson, CPA, CFP® at legacy@henrysfork.org or 435-213-9986.