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Fourteen Tax Management Techniques (2009-11-23)

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Fourteen Tax Management Techniques (2009-11-23)  Reply with quote  

Fourteen Tax Management Techniques (2009-11-23)

by David John Marotta

No one approaches financial planning with the goal of paying more taxes. Tax management, like all financial planning, is based on the premise that small changes made over time can achieve big goals.

Read the complete column at http://www.emarotta.com/article.php?ID=364

David John Marotta
Marotta Asset Management, Inc.
Fee-only Financial Planning
Post Mon Nov 23, 2009 4:59 pm
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I agree completely with one of the points Marotta makes: "Don't file your taxes in April and then forget about them for the next 10 months." However, I disagree with another when he says, "Savvy tax management requires professional assistance."

He lists fourteen techniques (very briefly summarized)

1. Don't pay the AMT if you don't have to.
2. Use capital losses to offset capital gains.
3. Sell a security to take the loss, then buy it back 31 days later.
4. Invest in individual stocks instead of mutual funds.
5. Use appreciated stock for charitable gifts.
6. If over age 70 1/2, use IRA distributions for gifting.
7. Some states give deductions for 529 contributions.
8. Make your fourth-quarter state estimate payment before Dec 31.
9. Maximize generational transfers through gifting.
10. Put investments in the correct type of retirement account.
11. Small business owners can contribute as both employer and employee.
12. Small business owners can defer income and/or accelerate expenses.
13. Consider converting to Roth accounts.
14. Recharacterize underperforminig Roth accounts.

I'm not a professional and I'd be comfortable doing any and all of those for myself. Though they're not all applicable right now. Of course, you don't want to jump right in to all fourteen right off the bat. But over time, I'd think anyone with average intelligence and just the time, interest and motivation, can learn to do all that for him/herself.

It's good to be reminded, though. Wink

Post Tue Nov 24, 2009 5:50 am
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hii  Reply with quote  

thanks for great tips ..they really helps!

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Post Mon Nov 30, 2009 8:55 am
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These are some really good tips you've listed. Put them in my tax act folder.

Post Mon Dec 07, 2009 6:27 am
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Putting investments in the correct investment accounts can also generate significant savings. Fixed-income investments belong in traditional IRA accounts. Interest is taxed at ordinary income tax rates, but the entire value of an IRA account is taxed at ordinary income tax rates anyway upon withdrawal. Appreciating assets should be in taxable investment accounts where the growth will be at a 15% capital gains rate, which is likely much lower than your ordinary income tax rate. Additionally, any foreign tax paid on foreign stock investments is tax-deductible in a taxable account.
Post Mon Jan 04, 2010 10:01 am
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