“Let’s take lemons and make lemonade” tax reduction harvest
with S&P500 Index As of noon on December 19, 2022 is down nearly 20%. tax loss harvestingwhich allows losses to offset the gains on the brokerage account, said Roberge.
After reducing your investment income for 2022, you can use your additional losses to reduce your regular income by $3,000 and carry any remaining losses forward into future tax years.
Karen Van Voorhis, CFP and Director of Financial Planning at Daniel J. Galli & Associates in Norwell, Massachusetts, also proposed this strategy.
“Harvesting losses is an easy way to take lemons and make lemonade at the end of a less-than-optimal year for the stock market,” she said.
Consider year-end loss conversion
Another strategy to consider when markets fall is Conversion to a Ross Personal Retirement Account, move pre-tax funds into the Roth IRA for future tax-free growth. However, you may be taxed on the converted amount.
Loss conversion in a falling market has two advantages. You can buy more shares for the same amount and potentially pay less tax on the transferred portion.
Of course, you’ll want to know how the conversion will affect your 2022 taxes. Higher Medicare Premiumsamong other tax effects.
But it’s easy to estimate your income for 2022 and see how that conversion affects your taxes, says Jacksonville, Fla.-based CFP and founder of HCP Wealth Planning. says Kevin Burkle.
Multi-year charitable giving “bundles” by donor-advised foundations
Increased standard deductions for 2018 and beyond will make it less likely to itemize deductions on tax returns — charity gifts etc. Or medical bills – making it harder to claim these tax breaks.
The reason for this is that you choose the greater of standard deductions or itemized deductions on return. The standard deduction for 2022 is $12,950 for him as an individual and $25,900 for him as a couple filing together.
One way to optimize charitable giving is through the so-called Donor Advice FundPhilip Herzberg, CFP and Lead Financial Advisor for Team Hewins in Miami, explains: The account works like a charitable checkbook and offers prepaid deductions.
The best investment to give, he said, is “a highly valued public stock.” By avoiding the capital gains tax that would be imposed on the sale, he said, the surcharge would be reduced “while maximizing the philanthropic impact.”
