You may not be able to avoid Uncle Sam, but with careful planning, you may be able to minimize the tax bite. Here are a few year-end tax planning strategies:
- Contribute to an IRA account: With the changes in the tax law you now have several choices:
- Traditional IRA: Contribute up to $4,000 and receive a current tax benefit as well as tax deferred earnings on your money.
- Roth IRA: Contribute up to $4,000 and have your money grow tax deferred and receive tax-free income at retirement.
- Education Savings Account: Contribute up to $2,000 per child and have the money grow tax deferred until college.
- Make charitable contributions: Making donations may provide you a tax break while helping others.
- Gifting: You can gift up to $11,000 per year to any individual and incur no gift tax.
- Capital gains: If you are thinking of selling appreciated assets (example: stock), how long you have held the asset can make a difference in the capital gains rate you will pay. Make sure you know the rules before you sell.