Be careful with your tax planning.
Have you gotten some big gains this year? You should consider looking for unrealized losses in your portfolio and possibly selling off those investments before the end of the year to help offset those gains. This can reduce your 2014 tax liability.
Careful tax planning can help, because if you want to minimize the impact on your asset allocation, you must keep in mind the wash sale rule. This rule prevents you from taking a loss on a security if you buy a substantially identical security (or an option to buy such a security) within 30 days before or after you sell the security that created the loss. You can recognize the loss on your taxes only when you sell the replacement security.
Fortunately, there are ways to avoid the wash sale rule and still achieve your tax goals:
You should immediately buy securities of a different company that is in the same industry or shares in a mutual fund that holds securities much like the ones you sold.
- Wait 31 days to repurchase the same security.
- Before selling the security, buy additional shares of that security equal to the number you want to sell at a loss and then wait 31 days to sell the original portion.
Do you want more ideas on saving taxes on your investments? The tax professionals at Ciuni & Panichi, Inc. are always ready to help. We have tax-efficient strategies for all your investments. Please contact Jim Komos, CPA, CFPTM at 216-831-7171 or jkomos@cp-advisors.com.
You might also be interested in:
Combining Business Travel with Vacation Pleasure and Get Tax Benefits
Tax Deduction: Is My Elderly Parent a Dependent?
© 2014
