Broker Check

8 More Easy Wins

| January 21, 2021

Disclosure and Possible Warning:

At the time of this writing these things were potentially as described. Financial facts change over time. e.g. interest rates. Financial situations change over time. Tax rules and laws definitely change over time. Consult appropriate professionals.

9. Offset investment losses in a taxable account

If single you can have $52,950 total taxable income and any long term capital gains would be taxed at 0%. Married threshold is $105,900. Assuming standard deduction for both. 

10. Save potential Kiddie Tax

Advantage of children still living at home or in college, perhaps they would normally be subject to "kiddie tax."  But they can have up to $1,100 in investment gains and pay no tax. Watch out for financial aid formulas that might consider that the child's money and net them less financial aid.

11. Self-employed and business owners might move income into your lower rate year

If you have a good handle on what your income looks like in both 2021 and 2022, and there will be a big difference between those 2 years, move e.g. purchase of computers into the year with your lower tax rate.

12. Gift $15,000 to as many people as you wish without triggering the Gift Tax in 2021.

While gifting might be considered a highly personal choice, there might be some advantages. Per Humble Dollar 17 states plus Washington DC have their own estate or inheritance tax that might kick in sooner than Federal Estate Tax that currently has an exemption of $11.7 million. At the other end of the financial spectrum, making gifts now might help with potential Medicaid. Another topic.

13. Reduce your tax withholding if you typically get a big tax refund.

With the extra cash flow stash it in the highest safe interest available, maybe online. Takes discipline and some like the financial windfall feeling but ultimately perhaps more money in your pocket this way w small if any extra risk.

14. Use a rewards credit card

I have had one for many years. At some point maybe 18 months ago I heard from Microsoft no more support of Windows 7. Financial services requires keeping all the protection updated and my computer was probably 90 in dog years. So I cashed in my credit card rewards and am happily using my Windows 10 laptop. A big improvement!

15. Review your checking and credit card statements for automatic payments to providers you don't use e.g. streaming services etc.

"Get the facts" can't hurt. Some make cancelling more difficult than others. Consider an app. I've not used one, but if it appeals, maybe it is worth a try.

16. Is "diversification the financial markets only 'Free Lunch?'"

I had actually never heard this before that I recall, so, direct quote from Humble Dollar linked below and I respect Jonathan Clements the author.

For a comprehensive review of your personal situation, always consult your tax or legal advisor. Neither Cetera Advisors LLC, nor any of its representatives may give tax or legal advice.

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