Oh, my, can you believe it’s already November.  Actually 1/3 gone, too!

Now is the time to figure out what sort of things we can do to minimize our tax bill.

Today, we’ll discuss what we can do to minimize our personal taxes.

First- do we itemize or not?

I know, I know, it’s really tough to itemize nowadays.  Given that we can only deduct $ 10,000 for property taxes and state taxes, getting over the hurdle of standard deduction/exemption limits is tough.

But, if we do itemize, then, now is the time to get rid of all those items- clothes, computers, TV’s, etc. that we no longer use and are just cluttering up our houses.

Make sure you get your receipts.   And, keep a list of everything you donated- and their condition.

If you are having us do your taxes, you’re done.  We have an up-to-date list that we use (and is accepted by the IRS) to determine the value of the items donated.

 

If not, then you probably should check out the Salvation Army site.  It has a pretty good compendium of items.  (If you prefer, here’s the Goodwill valuation site.)

 

See, that cleans up your abode somewhat – and can generate some valuable tax refunds.

Of course, if you have the cash- then donating to causes you that make your soul smile are another way.  (NOTE: If you are NOT able to itemize, then you are limited to charitable donations of $ 300 (single) or $ 600 (married)- these are the amounts deductible for those of us who can’t itemize.  If you can itemize- and have the cash- then one can donate UP TO 100%  of adjusted gross income [that’s one’s taxable income] for this year ONLY.)

Second- do you own stocks? 

Now is the time to scour your stock holdings.  How many of them are losing money?   It could be very useful to harvest these losses now.

Let’s assume you own stock in FlyByNite company.  You bought it for $ 5000 and it’s worth $ 1000 now.  That’s a $ 4000 loss that can (almost) be deducted from your income.  [Actually, we are limited to a maximum of $ 3000 in capital losses each year.  If this were the only stock transaction we made this year, then we would be deducting $ 3000 from our income in 2021, with a $ 1000 carryover for 2022.] Or, you can balance this $ 4000 loss to those gains you made on Tesla stock.  You bought it for $ 3,000 and now it’s worth $ 20,000.   Don’t sell it all- just sell $ 4706 of the stock.  After deducting the cost ($706) of that stock, you have a $ 4000 gain.   Oh, wait, that gain is now covered by your $ 4000 loss.  And, you are sitting on $5706 of non-taxable money.

You can buy new stock with those funds, donate them to charity (for yet another deduction), or pay off your credit card bill.  (You can also discuss the various choices with us or your tax advisor.)

On Monday, we’ll cover things you can do with your business.