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Part 2 of 3

When it comes to taxes, often times the 4th quarter of the year can be make or break time for taxpayers. We’re here to make sure this is a time of year for you make decisions that will set you up for a success at tax time.  Remember…

If you only think about taxes around April 15th, you’re going to pay too much in taxes.

Often times there are strategies we can recommend to you that simply restructure the spending that you already had in mind but making that spending tax deductible.  That’s why we want to help you to review the tax implications of your current spending to see if there is a way to use that spending to your advantage.  For example, we can help you make charitable gifts the smart way.

If you plan to make a significant cash gift to charity, consider giving appreciated stocks or mutual fund shares that you’ve owned for more than one year instead of cash.  Doing so supersizes the saving power of your generosity. When you donate an investment, your charitable contribution deduction is the fair market value of the securities on the date of the gift.  That means, your gift is not limited to the amount you paid for the asset, you can include the gains in the amount of the gift.  That also means you never have to pay tax on the capital gains earned by the investment.   This approach means you maximize your deduction while minimizing the associated tax.  It’s a win-win for you and the charitable organization.

On the flip side, you should not donate stocks or fund shares that lost money. You’d be better off selling the asset, claiming the loss on your taxes, and donating cash to the charity from that investment.  Check out part 1 in this series for the benefits of selling losing investments before the end of the year.

Also, don’t forget about your non-cash gifts to charity before the end of the year.  You can turn your unused household items, clothing and other items to give you an extra tax break.  Your non-cash charitable gifts to non-profit and/or faith-based organizations are also tax deductible.  Making those donations before December 31st will allow you recognize that tax deduction during the 2018 tax year.

As always, if you need specific guidance on what you should be doing before the end of the year to set your self up for success at tax time please contact us.


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