Deck the Halls with Boughs of Tax Savings....

​Hi, my name is Chris Spargo, it’s a pleasure to make your acquaintance! I’m new writing here at the  Sherman Financial blog so I thought I’d take the opportunity to introduce myself, and while I’m at it, hook you up with some simple advice that could save you a lot of money in your taxes. It’s mid-December and if you’re like me, you’d much rather be reading Charles Dickens with some Bing Crosby in the background, but don’t forget – nothing says Merry Christmas like big savings on your taxes! Let’s take at look at these four user-friendly, end of the year tax-saving strategies.

1.  Deferred Income

​This one is simple. It’s December. If your customer or client pays you today you will owe taxes on that money this April. But if they pay you January 1 or later your taxes will not be affected… at least for this year. Why is this useful? Perhaps you’ve had an especially good year and are teetering toward the top of your tax bracket. If you receive that payment it might put you over the edge – all that money will be taxed at an unfortunately higher rate! What if next year you aren’t expecting your income to be quite so high? Ah – bingo! Bill that customer late in December or in the new year and voila! You will receive the full payment at a lower tax rate. This trick isn’t always helpful – but for many people it’s a very valuable way to reduce taxes.

2. Sell Losing Investments to Offset Gains

If you have investments this is a biggie. AS YOU KNOW if you made any gains on good investments this year the US government will surely tax it. But DID YOU KNOW that if you made losing investments then you can go ahead and sell, sell, sell them away and for every dollar you lost on said investment it will offset gains from good investments dollar for dollar. Let me repeat myself – dollar for dollar! Amazing.
 
Maybe you only made bad investments for a loss. Well I’ve got good news for you. You can use up to $3000 of those losses to reduce taxable income. Stunning.
 
What if you lost over $3000? You can carry over those excess losses to the next tax year to offset investment gains or reduce taxable income. Two words from Uncle Sam, “Merry Christmas.”
 
And the moral of the story is – sell those losses! Reap your tax benefit and if your heart is set on it then buy the investment back in the new year.

3. Contribute to Your Retirement Account

Many companies offer 401(k) retirement plans where each year your employer will match every dollar you put into your retirement account (up to a limit, everybody’s got their limits). We are at the end of the year, therefore I would remind you to consider putting what you can into the account – it will only make you richer. If you are one of Sherman Financial's clients and have not maxed your 401(k) at least to the match, well then we need to talk.

4. Take List Minute Tax Deduction

​If you plan on itemizing deductions then please remember to give, give, give to charities, churches, and non-profits of your choice. If you’re intent on giving don’t wait for the New Year’s ball to drop! Give today and save on your taxes tomorrow.
 
Here’s a pro tip: you can donate appreciated stock and property for big tax benefits. If you’ve owned the stock for over a year you get double the benefit. Whaaat? And for property, you can deduct the properties market value on the date of the gift. Better yet – because you’re gifting this asset, you avoid paying capital gains on the built up appreciation!! 

This is a true pro tip and it’d warm my heart this Christmas if it saved you a lot of money.

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​Enjoy your holiday.
 
Use those savings to fill your houses with cheerful gifts and succulent roast turkeys.
 
Wishing you and yours a Merry Christmas and a Happy New Year.