Plan Ahead or Did I Say Plan Ahead?

Plan Ahead or Did I Say Plan Ahead?

October 15th has come and gone.  If that wasn’t an important date for you this year – congratulations.  Your lack of focus on October 15th probably means your 2019 taxes were not filed at the last-minute deadline this year.  But lookout.

Next year could be different.  That wonderfully misnamed “SECURE” and “CARES” acts are waiting to surprise you.  A previous tome of mine ridiculed the 1984ish naming of things (doublespeak) to mean something other than what it really is, but we can’t help ourselves from pointing it out once again.

The point of this message is that now is the time to start learning and calculating your tax consequences for this year while you can still do something about them.  I hope you desire to reduce your taxes to the lowest allowed by law.  That’s going to take some work this year as a lot of rules and limits have changed.

So, what can you do between now and the end of the year to lower your 2020 tax bite?  

Here are my three simple suggestions:

1.  Take your tax preparer out for breakfast or lunch.  Tell him or her you’d really like to pay the lowest amount possible this year and that you’d appreciate any suggestions.  Ask them about opportunities for 2020 and 2021. If you don’t ask, you don’t get, my father frequently reminded me.   It applies here.

2.  Look at your taxable securities investments and see what your gain/loss position is at the moment.   Do you have any “carryover” losses from last year?  Could you sell something now at a loss and buy it back 31 days later to offset some gain you might recognize if you sold one of your big winners and then bought it back again.  This is a technique we call raising your basis or increasing the number that you have to report to the IRS as your purchase price.  Sound confusing? Well, a short reminder that your author gives advice by the hour on this particular topic.

3.  Charitable gifts.  How about gifting some stock or mutual funds to your church or other favorite charity?  Instead of giving cash, giving appreciated stock helps you avoid the capital gains tax and moves your tax bill slightly lower versus gifting cash and then claiming a deduction.

There you go.  Wake up and take some action today.  It will be 2021 before you know it (please!!) and one of these ideas takes you 31 days or longer to fully implement. Get moving.

Some MainStreet readings on the CARES Act:

CARES Act info:

Jim Ludwick
Jim Ludwick

Jim Ludwick is the founder of MainStreet Financial Planning. His varied education and life experiences have enabled him to apply his knowledge and experience into useful solutions for personal financial problems. His writing and broadcasting activities allow him to help many more than just individual clients. He loves a microphone.

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