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Profit or loss tax collection
Miners may consider taxing losses, which allows them to offset capital gains with losses. Investors with more losing assets than winners can even deductible up to $3,000 relative to their regular income.
“If you are facing an unusually high income year or have suffered heavy losses, this could be a good strategy,” said Ashton Lawrence, CFP of Goldfinch Wealth Management in Greenville, South Carolina.
If you are facing an unusually high income year or suffering heavy losses, this can be a good strategy.
Ashton Lawrence
Financial Advisor at Goldfinch Wealth Management
However, those hoping to offload and buy back the same property need to be aware of the so-called semi-wash rules, which prevents someone from deducting a loss if they buy back “essentially identical” investments within 30 days.
And investors below a certain taxable income threshold Capital gains can be avoided on profitable assets held for more than one year.
They can then buy back the same investment for what is known as an “enhanced basis,” adjusting the purchase price to its present value to reduce future taxes.
Donate to charity
Philanthropic investors may also consider an end-of-year charitable gift, with the highest yielding assets held for more than a year, such as stocks or cryptocurrency, providing the greatest tax relief.
With the standard deduction of $12,550 for single filers ($25,100 for couples filing together) in 2021, it’s harder to split and claim write-offs.
But many people combine multi-year contributions, known as “pooling,” to clear the standard deduction thresholds.
However, in 2021, applicants can claim tax relief on cash gifts up to $300 ($600 on joint profits), even if they don’t repeat the deductions.
Retirees aged 70 or older can be considered so-called qualified charity distribution, a direct payment from individual retirement accounts before taxes, is not counted as taxable income.
Someone 72 years or older can use it to meet their annual needs minimum distribution required.
“Qualifying charity distribution is a valuable gifting strategy if you want to give to charity in a tax-efficient way,” says Lawrence.
Payment of medical expenses
If you plan to minimize your deductibles and spend substantial amounts on medical expenses in 2021, it may be reasonable to pay your healthcare bills before the end of the year to claim the write-off. larger debt.
In 2021, profilers can claim medical expenses deduction if eligible expenses – such as doctor fees, hospital visits, prescription drugs and more – exceed 7.5% of adjusted gross income.
“Eligible charges charged to a credit card on or before December 31, 2021, will be reported on your 2021 tax return,” Harris said.
Defer income to 2022
Those who expect to earn less in 2022 may consider deferring earnings, such as year-end bonuses or other payments in January.
Patrick Amey, CFP and advisor at Financial Advisory Service, Inc. of Overland Park, Kansas, said: “Be careful, because your taxes may be higher in 2022 than they are in 2021. “But it will delay paying taxes on income for an entire year.”
