With the year soon coming to an end, taxpayers can still take steps to lower their potential tax liability. The author feels that tax deferral is among the most important steps in tax planning. To accomplish this, he suggests clients max-out contributions to qualified plans, make calculated Roth conversions to avoid creating income while in a high tax bracket, and utilize asset location for tactical allocation by putting investments that typically fall in high brackets like fixed-income, commodities and REITS into tax-deferred vehicles.

Other strategies include harvesting losses to offset investment gains or to lower tax liability, giving up to the level of the gift tax exemption to lower the taxable estate without incurring gift tax, and contributing appreciated assets to charity in order to deduct the current fair market value without paying tax on the appreciation.

See Laurence Greenberg, “ABCs of Year-end Tax Planning,” bankinvestmentconsultant.com (December 16, 2014).

Posted by Ryan Moore, Associate Editor, Wealth Strategies Journal