Personal Finance

These year-end tax moves may help you save, regardless of what happens in Congress


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Offset investment gains with losses

Filers may consider tax-loss harvesting, which allows them to offset capital gains with losses. Investors with more losing assets than winners may even deduct up to $3,000 against their regular income.  

“If you are facing an unusually high-income year or had tremendous losses, this might be a good strategy,” said Ashton Lawrence, a CFP with Goldfinch Wealth Management in Greenville, South Carolina.

If you are facing an unusually high-income year or had tremendous losses, this might be a good strategy.

Ashton Lawrence

Financial advisor at Goldfinch Wealth Management

However, those hoping to offload and repurchase the same assets need to be aware of the so-called wash-sale rules, which prevent someone from deducting a loss if they repurchase “substantially identical” investments within 30 days.

Currently, wash-sale rules don’t apply to cryptocurrency. But House Democrats want to close that loophole, effective Dec. 31. 

Roth conversions

Another year of unsteady income has prompted tax advisors to discuss so-called Roth conversions with clients.

This tactic allows someone to convert funds in pre-tax individual retirement account or 401(k) to an after-tax Roth IRA. Investors owe levies on the converted money, but the Roth IRA provides tax-free future growth.  

“If you had a particularly lousy 2021, you might be better off eating some taxes now,” said enrolled agent Adam Markowitz, vice president at Howard L Markowitz PA, CPA in Leesburg, Florida.

If you had a particularly lousy 2021, you might be better off eating some taxes now.

Adam Markowitz

Vice president at Howard L Markowitz PA, CPA

Charitable giving

Someone age 72 and older may use it to satisfy their annual required minimum distribution.  

“The qualified charitable distribution is a valuable gifting strategy if you want to give to charity in a tax-efficient manner,” Lawrence said.

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