Late-night TV host David Letterman recites a humorous “Top Ten List” each show, but taxes are not a laughing matter. Now’s the time to become truly serious about tax planning.
Here, in no particular order, are 10 popular ways you can cut your personal tax bill at the end of 2007.
1. Balance your capital gains and losses
It’s well-known that capital losses from securities sales can be used to cancel out capital gains at the end of the year and vice versa.
So if you’ve already realized capital gains this year, pull down losses to offset those gains. If you’re still showing a net long-term capital gain on Dec.31, the gain is taxed at a maximum 15% federal rate (5% for individuals in the regular 10% and 15% tax brackets).
Similarly, earlier capital losses can be offset by capital gains realized at year-end. The gains are effectively tax-free up to the amount of the losses. If you’re still showing a net loss, it can also offset up ...(register to read more)