Happy Monday Everyone!

As promised, here are a few more tax planning options to consider as 2014 comes to a close:

Capital gains/losses: if you have a large capital loss, you probably already know you will only be able to deduct a net $3,000 in any given year. The key word is “net”. That means you can offset your losses with capital gains. The offset must be of the same type (long term capital gains offset long term capital losses; short term offsets short term). I would not recommend selling an asset you want to keep simply to offset a loss, but if you are ready to sell an asset with gains you may want to look at some of your losing assets as well. If you won’t have off-setting gains this year, no worries. Unused capital losses can be carried forward to later years.

If you are in the 10% or 15% tax brackets, your net long term capital gain may carry a 0% tax rate. This is important to remember as many taxpayers preparing their return manually may include their long term capital gains as part of their regular taxable income.

Most taxpayers pay 15% on long term capital gains but those over $400,000 ($450,000 married filing joint) may pay 20% tax on the gain. Short term capital gains are taxed at your regular income tax rate.

Again, taxes are computed on the net gain. Check with your tax advisor to see if a potential capital gain or loss offset is beneficial to you in your particular tax situation.

To your better wealth,