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Its Now or Never

December 27th, 2007 at 03:17 pm

As 2007 comes to a close, your still have time to take actions that could save you taxes either now, or in the future. Some ideas to consider include:

1. Last minute charitable gifts. If you use a credit card to provide a gift to a charitable organization, as long as the charge is made by December 31, you may deduct the charitable gift in 2007. This allows you to take a year end tax deduction without paying for it until 2008.
2. Roth conversions. If you have an IRA and a Roth IRA with the same brokerage house, they can usually make an immediate conversion from on account to the other. If your income was lower than usual in 2007, you may find that a Roth conversion is in your best interests. If so, this must be completed by December 31.
3. Capital losses. If you have stocks or mutual funds that have experienced a loss since you bought them, you may want to sell them by December 31. The loss can offset realized capital gains and may be used to lower your total 2007 income by up to $3,000.
4. If you have a large estate and are worried about paying death taxes, provide year end gifts of up to $12,000 ($24,000 for a couple) to your heirs. Your family members will appreciate receiving the gifts now and you will keep these gifted funds from possible future estate taxes.

If any of these ideas are appropriate for you, do them now, before the year ends and you have missed the opportunity.

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