Consider These Year-End Tax-Smart Financial Moves

Submitted by Edward JonesPrint Story | Email Story

With the holiday season upon us, you may be getting pretty busy. But once the holidays are over, you will enter into a new season – tax season. The filing deadline for the 2017 tax year is April 17, 2018, but until that date – and especially before the end of the calendar year – you may want to explore some tax-smart financial moves.

Here are a few to consider:

Boost your 401(k) contributions.
If you're like most people, you probably don't usually contribute the maximum amount to your 401(k), which, in 2017, is $18,000, or $24,000 if you're 50 or older. Unless you have a Roth 401(k), your contributions are made with pre-tax dollars, so the more you put in, the lower your taxable income. Ask your employer if you can increase your 401(k) contributions in 2017. Also, if you receive a bonus before the year ends, you may be able to put that toward your 401(k) too, thus deferring the taxes you'd have to pay on this extra income.

Add to your IRA. You have until the April 17 deadline to contribute to your IRA for the 2017 tax year, but the more you can put in now, the less you'll have to come up with at the filing deadline. Contributions to a traditional IRA are generally deductible, but the deductibility is phased out if your income rises above certain levels. For 2017, you can put up to $5,500 into your IRA, or $6,500 if you’re 50 or older. (Roth IRA contributions are never deductible.)


Contribute to a 529 plan. When you contribute to a 529 college savings plan, your earnings can grow tax-free, provided the money is used for qualified higher education expenses. (However, 529 plan distributions not used for these qualified expenses may be subject to income tax and a 10 percent IRS penalty.) Furthermore, your 529 plan contributions may be deductible from your state taxes.

Be generous. It's certainly the season for giving, and when you make charitable gifts, you can give and receive. By sending cash to a qualified charity, you may get a tax deduction, but if you look beyond your checkbook, you might gain even bigger benefits. Specifically, if you donate appreciated securities you've held for more than one year to charity, you may be able to deduct the value of the securities, based on their worth when you make the gift.

Offset your gains. If you own some investments that have lost value and may no longer be essential parts of your portfolio, you could sell them and use the loss to offset capital gains taxes on investments you've sold that have appreciated. If the loss from the sale was greater than your combined long- and short-term capital gains, you can deduct up to $3,000 against other income, including your salary and interest payments. And if your losses exceed your capital gains by more than $3,000, you can carry the remaining losses forward to future tax years.

Following these suggestions may help improve your tax situation for the year. So, give them some thought and consult with your tax professional to understand what actions are appropriate for you.

This article was written by Edward Jones for use by your local Edward Jones Financial Advisor. Courtesy of Walter Lother, Financial Advisor, in North Adams, at 413-664-9253. Edward Jones, its employees and financial advisors cannot provide tax or legal advice. You should consult your attorney or qualified tax advisor regarding your situation.

 


Tags: financial planning,   retirement,   

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Clarksburg Gets 3 Years of Free Cash Certified

By Tammy DanielsiBerkshires Staff
CLARKSBURG, Mass. — Town officials have heaved a sigh of relief with the state's certification of free cash for the first time in more than three years.
 
The town's parade of employees through its financial offices the past few years put it behind on closing out its fiscal years between 2021 and 2023. A new treasurer and two part-time accountants have been working the past year in closing the books and filing with the state.
 
The result is the town will have $571,000 in free cash on hand as it begins budget deliberations. However, town meeting last year voted that any free cash be used to replenish the stabilization account
 
Some $231,000 in stabilization was used last year to reduce the tax rate — draining the account. The town's had minimal reserves for the past nine months.
 
Chairman Robert Norcross said he didn't want residents to think the town was suddenly flush with cash. 
 
"We have to keep in mind that we have no money in the stabilization fund and we now have a free cash, so we have now got to replenish that account," he said. "So it's not like we have this money to spend ... most of it will go into the stabilization fund." 
 
The account's been hit several times over the past few fiscal years in place of free cash, which has normally been used for capital spending, to offset the budget and to refill stabilization. Free cash was last used in fiscal 2020.
 
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