As we hurtle down the path toward the end of the year, smart to stop and consider what personal year-end planning you can do before the ball drops in Times Square. There has been a lot of change over the past year regarding personal income taxes. As such, now is the ideal time to review both the potential opportunities and challenges now available, and the steps you may be able to take to address them. Some tax strategies lie in managing your income, while others focus on taking full advantage of deductions. Here are five tax-shredding ideas for your clients to consider before year’s end:
1. Make charitable contributions. With all of the tax changes that have taken effect this year, charitable contributions remain one of the most effective itemized deductions. While contributions are subject to phase-outs due to income limitations, they are not affected by the alternative minimum tax (AMT). If your charitable dollars are material, consider donating appreciated stock to charity. This allows you a full market value deduction (subject to the phase-outs due to income limitations) for the value of the stock, and avoids any capital gains tax that would be due if you sold the stock. Stocks must have been held for at least one year to qualify.