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  • Mid-Year Tax Planning Action
  • Automatic Extensions of Time for Pass-Through Entities



    • Mid-Year Tax Planning Action

    Mid-Year Tax Planning Moves

    Half of the year is behind you now, so assess where you stand and take advantage of moves to be made before the end of the year that will save you taxes.

    Review your investments

    The stock market has been on a roller coaster this year and its performance for the rest of the year is uncertain. You may be sitting with some gains and/or some losses. Now may be a good time to reposition your portfolio by selling some investment holdings. Keep these key tax factors in mind:

    • Capital gains on the sale of securities held more than one year are taxed at no more than 15% (or zero if you wind up in the 10% or 15% tax bracket for the year).
    • If you sell securities at a loss, beware of the wash sale rule. You won't be able to claim the loss if you buy substantially identical securities within the period ranging from 30 days before and 30 days after the sale.
    • Keep transaction costs in mind. Transaction costs (e.g., brokers' fees) are not separately deducted. Fees to buy securities are added to basis; fees to sell them are netted from the sale proceeds.
    • Tax results are only one factor in making investment decisions.

    Review Your Retirement Savings

    If you are working, you can stash cash in a company-sponsored 401(k) plan, IRA, or other contributory plan. Keep these key tax factors in mind:

    • The earlier in the year that you add to your accounts, the longer there is for tax-deferred investment growth. For example, if you plan to put money into a Roth IRA for 2011, you have until April 16, 2012, to do so. However, if you do it by July 15, 2011, you'll have gained 9 months of tax-deferred earnings.
    • Your contributions may entitle you to a tax credit of up to $1,000 (the amount of the credit depends on your filing status and adjusted gross income). If you expect to qualify for this credit, you can reduce your income tax withholding at work to increase your take-home pay.
    • Take advantage of investment counseling which may be offered by your employer to help you better assess which investments to use for your 401(k) account.

    The moves you make depend on your personal tax situation, so review the ones you are considering with us by scheduling a complimentary telephone call.

    gmc cpa | 07/12/2011