2021 Tax Planning Tips

Once the new year starts there is little you can do to change your taxes for last year so instead you need to focus on what to do to save on taxes for the current year.
  1. Offset stock losses against short-term stock gains. By selling your losers and winners at the same time you will avoid paying taxes on the gains. Furthermore you can buy back the stocks at the depressed prices after 30 days so that when the stock does increase you can take advantage of the lower long-term capital gains rates.

  2. If you are lucky enough to have any capital gains and your are in the 15% or 10% tax bracket, take advantage of the 0% capital gains rate before the rules change again.

  3. Definitely use timing. Consider whether you will be making less money next year and therefore be in a lower tax bracket. If so, you should put off IRA distributions until next year, pay your R/E taxes early, pay your January mortgage payment early, bunch up your medical and itemized deductions in the current year or take other steps to take advantage of the dropping tax rates. Of course if the opposite is true then you should postpone your expenses and accelerate recognizing your income.

  4. If you are in the top tax bracket, take advantage of tax shelters to defer taxes until years when rates will be lower.

Keep on the lookout for Legislative changes to the tax code that could affect your current and long term tax planning strategies.

Please note that this site is for informational purposes only, users should seek advice from competent legal or accounting professionals before making specific decisions.