december 31

Accounting Business Tax

Year End Tax Saving Ideas For Individuals – Investment Gains And Losses

Investment Gains And Losses

Minimize taxes on investments by judicious matching of gains and losses. Where appropriate, try to avoid short-term gains, which are usually taxed at a much higher tax rate (up to 35%) than long-term gains, which in 2011 and 2012 are taxed at rates of zero and 15 percent depending on your tax bracket. Consider where feasible to reduce all capital gains and generate short-term capital losses up to $3,000 as well.

Tip: If you have a large capital gain this year, consider selling an investment on which you have an accumulated loss. Capital losses up to the amount of your capital gains plus $3,000 per year ($1,500 if married filing separately) can be claimed as a deduction against income.

Tip: After selling securities investment to generate a capital loss, you can repurchase it after 30 days. If you buy it back within 30 days, the loss will be disallowed. Or you can immediately repurchase a similar (but not the same) investment, e.g., another mutual fund with the same objectives as the one you sold.

Tip: If you have losses, you might consider selling securities at a gain and then immediately repurchasing them, since the 30-day rule does not apply to gains. That way, your gain will be tax-free, your original investment is restored and you have a higher cost basis for your new investment (i.e., any future gain will be lower).

Note: The maximum long term capital gains tax rate is currently 15 percent and will expire on December 31, 2012 when it’s set to rise to a maximum of 20 percent. Also of note is that starting in 2013, a 3.8 percent medicare tax may also be applied to long term capital gains. This information is something to think about as you plan your long term investments.

Feel free to call us if you need assistance with any of your long term planning goals.

Financial Planning Tax

College Tax Credit – It’s Not Too Late!

It’s not too late to take advantage of the American Opportunity Tax Credit, a credit that helps parents and college students offset the cost of college. This tax credit is part of the American Recovery and Reinvestment Act of 2009 and is available through December 31, 2012. It can be claimed by eligible taxpayers for college expenses paid until 2012.

Here are six important facts about the American Opportunity Tax Credit:

  1. This credit, formerly known as the Hope Credit, has been expanded. Eligible taxpayers can claim qualified tuition and related expenses paid for higher education through 2012. Qualified tuition and related expenses include tuition, related fees, books, and other required course materials.

    2.  

  2. The credit is equal to 100 percent of the first $2,000 spent per student each year and 25 percent of the next $2,000. Therefore, the full $2,500 credit may be available to a taxpayer who pays $4,000 or more in qualifying expenses for an eligible student.

    3.  

  3. The full credit is generally available to eligible taxpayers who make less than $80,000, or $160,000 for married couples filing jointly. The credit is gradually reduced, however, for taxpayers with incomes above these levels.

    4.  

  4. Forty percent of the credit is refundable, so even those who owe no tax can get up to $1,000 of the credit for each eligible student as cash back.

    5.  

  5. The credit can be claimed for qualified expenses paid during any of the first four years of post-secondary education.

    6.  

  6. You cannot claim the tuition and fees tax deduction in the same year that you claim the American Opportunity Tax Credit or the Lifetime Learning Credit. You must choose to take either the credit or the deduction.

    7.  

If you would like more information about the American Opportunity Tax Credit please call us. We’re more than happy to help.

 

Enjoy
the ride.

Let us take the mystery out of financial planning so you can focus on what matters.
Chat with an Advisor
— Free Consultation
  • Silicon Valley
  • Sacramento
1-408-778-9651
Envelope

Company

Services

  • Tax Resolution
  • Tax Preparation
  • Accounting
  • Financial Planning
  • Estate Planning
  • Entity Formation
  • Investment Coaching

Locations

Silicon Valley
111 N Market St, Ste 300
San Jose, CA

Get Directions

Sacramento
Appointment Only

Newsletter

Join our Weekly Newsletter! We promise we won’t spam.

Copyright All rights Reserved. Financial Dream Team, like all providers of personal financial services is required by law to inform their clients of their policies regarding privacy of client information. The information in this material is not intended as tax or legal advice. Financial Dream Team, USA, LLC is a registered business in Califronia. Provided content is for informational purposes only.

Scroll to top