12/12/2023
When you take advantage of the tax code’s offset game, your stock market portfolio can represent a little gold mine of opportunities to reduce your 2023 income taxes.
The tax code contains the basic rules for this game, and once you know the rules, you can apply the correct strategies.
To avoid higher rates, here are four possible tax planning strategies.
Strategy 1
Examine your portfolio for stocks you want to sell and make sales where you offset short-term gains subject to a high tax rate, such as 40.8 percent, with long-term losses (up to 23.8 percent).
Strategy 2
Use long-term losses to create the $3,000 deduction allowed against ordinary income.
Strategy 3
Do you give money to your parents to assist them with their retirement or living expenses? How about children (specifically, children not subject to the kiddie tax)?
If so, consider giving appreciated stock to your parents and your non-kiddie-tax children, and have them sell the stock. Why? If the parents or children are in lower tax brackets you can transfer the gain which would be imposed at your tax rate to them at hopefully a lower tax rate.
Strategy 4
If you are going to donate to a charity, consider appreciated stock rather than cash, because a donation of appreciated stock gives you more tax benefit.
These stock strategies have a long history in tax planning. If you need my help with any of them, please call my office at 209-451-0428
