John Matthews
WMAL.com
FAIRFAX, VA — For most of us, the last week of the year is usually a time to relax and spend time with family – but not for accountants and financial planners.
“This is a very busy time for financial planners like us, because people are rushing to do year-end activities – tax strategies with their investments, there are wills and trusts and estate planning issues – a lot of things have 12/31 deadlines, so it’s a busy time for us right now,” says WMAL Financial Expert Ric Edelman, Chairman of Edelman Financial Services.
Edelman says there are several things taxpayers can do before the end of the year to take a bite out of their 2016 tax bill. For example:
* Ask your boss to push off your end-of-year bonus to early 2017 instead. That will give you another year before you’re liable to pay taxes on that extra income.
* Sell off losing investments NOW. Edelman says many mutual funds did poorly in 2016. If you’re invested in one of those, or in losing stocks, you can take the loss as a capital loss on your tax return.
* Make tax-deductable donations NOW – and be sure to get a receipt, or save the cancelled check to prove you made the donation in 2016. If you’ve been putting off emptying the closet, use your time off to get it done, then donate all those clothes and other items to a charity like Goodwill or Purple Heart.
* If you’re self-employed, and don’t have a retirement account, open an IRA NOW. You don’t have to put money into it until spring, but having the account open now can help you in 2016. Speak with a financial planner to help you set that up.
“The goal at year-end is to lower your taxable income,” says Edelman. “You do that by deferring income and by accelerating deductions, and if you do those things, you can improve your tax situation come filing time in April.”
Copyright 2016 by WMAL.com. All Rights Reserved. (PHOTO: Megan Pendergrass/CNNMoney)
