Year End Tax Planning for Investors

Click on the below audio to listen to a highly informative podcast from Vanguard on Year end tax planning specifically geared towards investors.  Some of the important highlights of the podcast are:

1. Use Tax Advantage Accounts to Rebalance your Portfolio Before Year End

2. Look at Your Taxable Accounts to Harvest Losses

3. Plan for Higher Taxes this Year: New Highest Income Tax Bracket of 39.6%, New Medicare Surtax of 3.8% on Net Investment Income.  New 20% Capital Gains Rate on Long Term Capital Gains for people in the highest ordinary income tax bracket.

4. If you are age 70 1/2 or older you are required to take RMDs (required minimum distributions) out of your qualified retirement accounts (not including Roth IRAs). From now until December 31st you can make a Qualified Charitable Distribution (QCD) from your retirement account.  This can "kill two birds with one stone" by fulfilling your RMD requirements and making your charitable contribution for the year.  "I love how you can do a QCD using your RMD out of your IRA."

5. New (Pease) Limitation on Itemized Deductions - Single Taxpayers with $250,000 of adjusted gross income or married taxpayers with $300,000 must reduce their itemized deductions 3% for the amount that their adjusted gross income exceeds these thresholds.