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Tax strategies for individual investments and planning

1. Generally, tax strategies operate in two time frames - now and later. " Now" refers to the twelve months of the current tax year. "Later" refers to the long-range tax strategies that benefit taxpayer future. This includes maximizing the tax-deferred savings offered by a qualified retirement plan, such as a 401(k). One strategy people use is shifting income to other family members ( like the children) to lower taxpayer income tax. Just need to watch out for the "kiddie tax".
How about "charging" expenses at year-end?

2. Although tax considerations should not drive investment decisions, it makes sense to get most tax advantage out of selling a stock or mutual fund. The biggest tax benefit is maximum allowable $3,000 in net capital losses each year to deduct against ordinary income, which is taxed at taxpayer marginal tax bracket. What about 401(k) contribution?

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1. Tax strategies:

Agreed that tax strategies should be both short and long term because the goals are very different for the two. Whereas short term strategies may focus more on tax savings, long term planning is more goal-driven. Long term goals may include wealth accumulation, retirement planning, education for descendants, charitable goals but even with longer term goals, tax planning is a consideration (for example, estate planning).

One of the concepts that many taxpayers have trouble understanding is that if the taxpayer has control over the wealth, then the taxpayer will usually pay the tax. Even the 'kiddie' tax does not actually transfer the wealth because the parents still control the children's investments. There are some alternatives to accomplish a goal of ...

Solution Summary

The 512 word solution discusses various types of tax strategies that can be used with investments.