Kiplinger: Smart Year End Tax Moves
December 11, 2008 by blackgirlgrown
Filed under money
Kiplinger’s Personal Finance Magazine, December 2008: The past year’s market rout has probably left you with some real dogs in your investment portfolio. But every dog has its day. By unloading some of your losers by year-end, you can still savor the satisfaction of trimming your 2008 tax bill next spring. “Years like this offer the greatest opportunity to offset current or future capital gains or other income,” says Josh Willard, senior vice-president of the Coghlan Financial Group, in San Diego.
You must first use your capital losses to offset any capital gains. After that, you can apply your losses to offset up to $3,000 of ordinary income in 2008. This strategy is particularly valuable because wages and interest income are taxed as high as 35%, compared with a maximum 15% rate on long-term capital gains (profits from the sale of investments that you owned for more than a year) and qualified dividends. Investment losses that you can’t use to offset capital gains or income may be carried over for future tax years, which could come in handy when the market rebounds. Caveat: This strategy applies only to your taxable accounts, not to retirement accounts. Read More.
