This is the time of year to look over your investments to see what opportunities you may have to reduce this year’s taxes. Well, the Fiscal Cliff and rising taxes next year are turning that thinking on its head. If your tax rates are higher next year, you may want to do the opposite of what you might normally do. This year you can avoid taking tax losses (offsetting income this year) because a tax loss is worth more to you next year if your tax rate is going to be higher. Similarly, rather than pushing off income into next year (if you can) you will want to accelerate income into this year as this year’s rate is projected to be lower. While both these strategies will increase the taxes you pay this year (you may be thinking I am crazy!), it can save you a significant amount of money over the next 18 months. Most people cannot time their income and deductions but your advisor should be reviewing your accounts to look for any opportunities that might be available.
The attached tax newsletter is a service I provide to my clients on a regular basis. I hope you find the information I provided helpful.
Securities and Investment Advisory Services offered through NFP Securities, Inc. Member FINRA/SIPC NFP Securities, Inc. is not affiliated with Benefit Service Company.
NFP Securities, Inc. does not provide tax or legal advice. Any decisions whether to implement these ideas should be made by the client in consultation with professional financial, tax, and legal counsel.
The opinions expressed in this commentary are those of the author and may not necessarily reflect those held by NFP Securities, Inc. This is for general information only and is not intended to provide specific investment advice or recommendations for any individual. It is suggested that you consult your financial professional, attorney, or tax advisor with regard to your individual situation. Comments concerning the past performance are not intended to be forward looking and should not be viewed as an indication of future results.
Securities and Investment Advisory Services offered through NFP Securities, Inc. Member FINRA/SIPC