http://blog.mutualdecision.com/articles/2007/12/19/investment-tax-strategies-for-the-holiday-season en-us 40 Insight from the minds behind MUTUALdecision <div>The countdown to the New Year has begun but before the ball drops, actually before 4 PM EST on that Monday, review your investments and place your sell orders for tax-driven transactions. &nbsp;For stocks and other securities, make sure your order is placed in time for it to be executed.&nbsp;This is particularly important for thinly traded stock and bonds. Taking a loss will offset gains and you can take an additional $3,000 of losses (on a joint return; $1,500 on a single return) in excess of capital gains as a deduction on your income tax returns.&nbsp;For the maximum advantage, try to offset short-term gains with short-term losses and long-term gains with long-term losses.&nbsp;</div> <div>&nbsp;</div> <div>For mutual fund investors, even if you haven&rsquo;t sold any funds this year, you still many have a taxable capital gain.&nbsp;Mutual funds must pass through their net capital gains or losses, and income, to their holders.&nbsp;Give your fund a call if you haven&rsquo;t heard from it about its 2007 distributions.&nbsp;And, as a general rule, sell a fund before its announced distribution date and buy a fund after that date.&nbsp;This avoids your having to pay taxes on its distributions.</div> <div>&nbsp;</div> <div>If you&rsquo;re selling your entire position in a fund or security skip to the next paragraph, but if you&rsquo;re selling a portion of your holding you need to specify the tax lot(s) you&rsquo;re selling or the First In, First Out (FIFO) rule will apply. &nbsp;The potential trap here is if you hold a fund or security which you bought at various times, the cost basis of each transaction could be very different.&nbsp;Make sure you specify the most advantageous tax lot to sell. &nbsp;&nbsp;Mutual fund investors have a third option which is to use the average cost of their holding.&nbsp;Note: Before you make any tax-based decisions you should consult your tax adviser.</div> <div>&nbsp;</div> <div>It&rsquo;s not too late to make, or maximize, your 2007 IRA and 401-K contributions.&nbsp;Why make them?&nbsp;Because these are tax-deferred accounts.&nbsp;Even if your income is such that you can&rsquo;t take a deduction for your IRA contribution, once contributed all income and gains are tax deferred. &nbsp;Then, the power of tax-free compounding works for you.&nbsp;Using these accounts, investors can convert taxable interest and dividend (especially non-qualified) income into tax free (until they begin withdraws at age 70 &frac12;) income.&nbsp;For investors seeking to diversify their portfolios in a tax efficient manner, retirement accounts are a great place for high yielding taxable investments.</div> <div>&nbsp;</div> <div>So before you settle in to watch football or hide from the in-laws review your investments and minimize your tax liability.&nbsp;When the flowers come up in April, you&rsquo;ll be glad you did.</div> Wed, 19 Dec 2007 12:58:00 -0600 urn:uuid:ac0a45f1-72f6-4692-a726-82d14c7aff72 Bill Byrnes http://blog.mutualdecision.com/articles/2007/12/19/investment-tax-strategies-for-the-holiday-season Investing Mutual Funds Mutual fund blog Investing Tax Strategies Mutual Fund Taxes