Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
End of year tax suggestions?
Old 12-22-2010, 10:54 PM   #1
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: May 2004
Posts: 11,614
End of year tax suggestions?

I sold some appreciated MFs within the last few days in order to make use of the low 2010 rate on cap gains (I'll make use of the low rates again for the next two years, now that the extension has been signed into law. Who knows what will happen after that).

We don't have any big deduction-producing moves to make this year: we bundle our deductions and take the standard deduction every other year. In 2010 we'll take the standard deduction. After Jan 1 we will make our charitable contributions.

Any other year-end tax-saving ideas that we all can consider while there's still time?
__________________

__________________
"Freedom begins when you tell Mrs. Grundy to go fly a kite." - R. Heinlein
samclem is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 12-22-2010, 11:12 PM   #2
Full time employment: Posting here.
 
Join Date: Apr 2009
Posts: 731
Quote:
Originally Posted by samclem View Post
I sold some appreciated MFs within the last few days in order to make use of the low 2010 rate on cap gains (I'll make use of the low rates again for the next two years, now that the extension has been signed into law. Who knows what will happen after that).

We don't have any big deduction-producing moves to make this year: we bundle our deductions and take the standard deduction every other year. In 2010 we'll take the standard deduction. After Jan 1 we will make our charitable contributions.

Any other year-end tax-saving ideas that we all can consider while there's still time?
You could sell some investments at a loss to offset that gain - depending on what works for you.

Unless you itemize, I think it's tough.

If you had earned income, you can put $ into a Roth IRA which will save taxes in the long run.

If you are close to being able to itemize you can make the charitable contributions this year. I remember somebody mentioning that they do two years of charitable contributions in one year (January & December) so they could have higher deduction and itemize that year, then not do it the next.

How did you manage not to be able to itemize? Somehow I always have deductions - mortgage, medical some years, property tax...
__________________

__________________
Retired July 2, 2010 at 62. My only regret is that I couldn't do it sooner.
thinker25 is offline   Reply With Quote
Old 12-22-2010, 11:33 PM   #3
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: May 2004
Posts: 11,614
Quote:
Originally Posted by thinker25 View Post
How did you manage not to be able to itemize? Somehow I always have deductions - mortgage, medical some years, property tax...
A cheap house helps, and a mortgage that only has about 9 years left to go really reduces the interest component.

I'm thinking of adding the dog as a dependent.
__________________
"Freedom begins when you tell Mrs. Grundy to go fly a kite." - R. Heinlein
samclem is offline   Reply With Quote
Can I Prepay 2011 Property tax and deduct it this year?
Old 12-23-2010, 12:58 AM   #4
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
haha's Avatar
 
Join Date: Apr 2003
Location: Hooverville
Posts: 22,380
Can I Prepay 2011 Property tax and deduct it this year?

I almost never have had itemized deducitons, but this year I will, due to the SS payback.

Can I prepay my property tax for 2011 and deduct it this year, in addition to my 2010 property tax also paid this year? (2010 tax return)

Ha
__________________
"As a general rule, the more dangerous or inappropriate a conversation, the more interesting it is."-Scott Adams
haha is offline   Reply With Quote
Old 12-23-2010, 07:47 AM   #5
Moderator
MichaelB's Avatar
 
Join Date: Jan 2008
Location: Rocky Inlets
Posts: 24,406
Quote:
Originally Posted by haha View Post
I almost never have had itemized deducitons, but this year I will, due to the SS payback.

Can I prepay my property tax for 2011 and deduct it this year, in addition to my 2010 property tax also paid this year? (2010 tax return)

Ha
Generally yes, but you need to check to see if your local tax office accepts prepays .. many do not. If they treat the prepayment as a deposit against future liabilities, technically it would not be deductible.
__________________
MichaelB is online now   Reply With Quote
Old 12-23-2010, 09:28 AM   #6
Thinks s/he gets paid by the post
 
Join Date: Jan 2006
Posts: 2,925
Quote:
Originally Posted by thinker25 View Post
You could sell some investments at a loss to offset that gain - depending on what works for you.

If you had earned income, you can put $ into a Roth IRA which will save taxes in the long run.
If OP is in the 15% bracket w/ 0% LTCG rate (OP didn't say), selling at loss might not help and would waste the loss.....as you say, it depends.
Roth IRA is not necessarily better than TIRA ........again, it depends , but that's a whole subject by itself.
__________________
kaneohe is offline   Reply With Quote
Old 12-23-2010, 11:11 AM   #7
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
haha's Avatar
 
Join Date: Apr 2003
Location: Hooverville
Posts: 22,380
Quote:
Originally Posted by MichaelB View Post
Generally yes, but you need to check to see if your local tax office accepts prepays .. many do not. If they treat the prepayment as a deposit against future liabilities, technically it would not be deductible.
MichaelB, thanks for your answer. I called the treasurer's office, and they told me that I can only prepay if I have an exact bill in hand. However, that is impossible, as they don't send these out until the year in question.

I'll look for other possibilities to accelerate deductions.

Ha
__________________
"As a general rule, the more dangerous or inappropriate a conversation, the more interesting it is."-Scott Adams
haha is offline   Reply With Quote
Old 12-23-2010, 12:48 PM   #8
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: May 2004
Posts: 11,614
Quote:
Originally Posted by kaneohe View Post
If OP is in the 15% bracket w/ 0% LTCG rate (OP didn't say), selling at loss might not help and would waste the loss.....as you say, it depends.
Roth IRA is not necessarily better than TIRA ........again, it depends , but that's a whole subject by itself.
Yep, I'm contributing to a Solo401K to get my income below the top of the 15% bracket. Every dollar I get below the line makes room for another dollar of cap gains that will be taxed at 0%. Similarly, those at/near the top of the 15% bracket could sell stocks for a loss to help get their income down to make room for more 0% LTCG, or they could reduce their income with a TIRA, 401K contribution, charitable deduction (if they are itemizing this year), etc.

OT: If I call a vendor to buy a business related item now and put it on my credit card, when does the expense count for tax purposes: when I make the order, when it gets on my CC statement, or when I pay the bill?
__________________
"Freedom begins when you tell Mrs. Grundy to go fly a kite." - R. Heinlein
samclem is offline   Reply With Quote
Old 12-23-2010, 12:58 PM   #9
Full time employment: Posting here.
friar1610's Avatar
 
Join Date: Jun 2002
Posts: 820
I made my annual contribution to my alma mater a few days ago by transferring appreciated shares of one of my Vanguard funds (that I want to lighten up on anyway to help in my portfolio simplification effort) to the school's Vanguard fund. These aren't the real numbers, but the theory is I paid $100 for the shares, I transferred $199 worth. So I get a charitable deduction of $199 for which I only paid $100 and I avoid the CG tax on the $99 of gain. I would have given them money any way but this allowed me to give them a bit more without it causing any more pain.
__________________
friar1610
friar1610 is offline   Reply With Quote
Old 12-23-2010, 01:05 PM   #10
Thinks s/he gets paid by the post
walkinwood's Avatar
 
Join Date: Jul 2006
Location: Denver
Posts: 2,675
See if a T-IRA to ROTH transfer is beneficial this year.
__________________
walkinwood is offline   Reply With Quote
Old 12-23-2010, 04:01 PM   #11
Thinks s/he gets paid by the post
FIRE'd@51's Avatar
 
Join Date: Aug 2006
Posts: 2,315
Quote:
Originally Posted by kaneohe View Post
If OP is in the 15% bracket w/ 0% LTCG rate (OP didn't say), selling at loss might not help and would waste the loss.....as you say, it depends.
Exactly right. The other thing you want to be careful about is not to take short term losses in excess of your short term gains and have the excess apply against long term gains.
__________________
I'd rather be governed by the first one hundred names in the telephone book than the Harvard faculty - William F. Buckley
FIRE'd@51 is offline   Reply With Quote
Old 12-23-2010, 05:26 PM   #12
Full time employment: Posting here.
 
Join Date: Apr 2009
Posts: 731
Quote:
Originally Posted by kaneohe View Post
If OP is in the 15% bracket w/ 0% LTCG rate (OP didn't say), selling at loss might not help and would waste the loss.....as you say, it depends.
Roth IRA is not necessarily better than TIRA ........again, it depends , but that's a whole subject by itself.
Oh this is interesting: Is this what you mean - if you're in the 15% bracket, the LTCG tax is 0%? I didn't know that. I haven't been in the 15% tax bracket before but I will be this year and probably the next two....

You gotta love retirement...
__________________
Retired July 2, 2010 at 62. My only regret is that I couldn't do it sooner.
thinker25 is offline   Reply With Quote
Old 12-23-2010, 07:45 PM   #13
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: May 2004
Posts: 11,614
Quote:
Originally Posted by thinker25 View Post
Oh this is interesting: Is this what you mean - if you're in the 15% bracket, the LTCG tax is 0%? I didn't know that. I haven't been in the 15% tax bracket before but I will be this year and probably the next two....

You gotta love retirement...
Yes, that's right. But each dollar of LTCG, even though it isn't taxed, increases your income so it's possible that you can force yourself out of the 15% bracket, and then you'd have to start paying taxes on the cap gains from the stocks sold. The good deal is expected to last 2 more years, but you've still got time to reap some benefits in 2010 if you have some appreciated assets. Unfortunately, to make this work you have to make an accurate estimate of what your taxable income will be before the end of the year.

I hate our tax system.
__________________
"Freedom begins when you tell Mrs. Grundy to go fly a kite." - R. Heinlein
samclem is offline   Reply With Quote
Old 12-24-2010, 03:24 AM   #14
Thinks s/he gets paid by the post
Koolau's Avatar
 
Join Date: Jul 2008
Location: Leeward Oahu
Posts: 3,240
I love Steve Martin's ancient bit about taxes. Paraphrasing: "How would YOU like to make a million dollars and pay NO taxes? First, make a million dollars. Then, don't pay taxes on it. If the IRS comes asking about it, say 'I forgot'"

It could work.
__________________
Ko'olau's Law -

Anything which can be used can be misused. Anything which can be misused will be.
Koolau is offline   Reply With Quote
Old 12-24-2010, 07:43 AM   #15
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Jun 2005
Posts: 8,615
While not strictly a suggestion for taxes, I would suggest that if there are any accounts that you want to close that you do so before the end of 2010.

If you let them linger into 2011 to close them, you may have forgotten about them by the time April 2012 rolls around although you should get a 1099 in early 2012 noting that $5.91 you received.

For folks who contribute to their 401(k)s, it may be too late but make sure it is topped up with your last paycheck if you are under the maximum contribution limit. Also set your 2011 contribution level to be be 2% more since that's the extra amount due to SS tax reduction.

If you will turn 50 years old at any time in 2011, adjust your contribution to your 401(k) and IRAs to take advantage of the catch-up contribution.
__________________

__________________
LOL! is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
End of Year 1 of ER walkinwood FIRE and Money 6 05-05-2009 08:48 AM
2008 End-of-year quiz REWahoo Other topics 34 01-03-2009 02:46 PM
44 and Retiring at End of Year silvertip Hi, I am... 7 04-08-2008 05:58 PM
End of year email... Andy R Forum Admin 31 11-24-2007 10:10 PM
End of year tax planning for wage slaves.... maddythebeagle Young Dreamers 22 12-22-2006 09:39 AM

 

 
All times are GMT -6. The time now is 05:27 AM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.