This week, I’m talking about  year-end tax planning to help you take advantage of opportunities to potentially lower your taxes this year. 

Today, I’m talking about how to review your gains and losses, which is something that you’ll want to do with your tax advisor and financial advisor near the end of every year. 

In 2020, especially, there are wild variances in returns among different asset classes and types of investments. If you own energy stocks, financial stocks, international investments or value stocks, you’re likely to have losses. If you have a heavy concentration in tech companies or consumer discretionary stocks, you’ll likely have some big gains there. 

Outside of your investment portfolio, you may have gains or losses from selling business or real estate or other assets. 

The key here is that you’ll want to review both realized and unrealized gains and losses in your portfolio to determine if it makes sense to sell in order to offset gains for the year. For example, let’s say you sold a stock earlier this year in a taxable account that had a gain of $50,000. Normally you would owe taxes on the amount of the gain, but if you have a loss in another stock or investment in the same account, you can also sell that investment and the losses will reduce the amount of the gains. 

Even if you don’t want to permanently sell the investment, as long as you stay out of that investment for 30 days, you can buy it back later and still recognize the loss. 

This is an important strategy that should not be overlooked, so be sure you take the time to review gains and losses with your advisors before the end of the year to determine if you can offset any of those gains and reduce your tax bill as a result. 

That’s it for today. Thanks for listening. My name is Ashley Micciche and this is the One Minute Retirement Tip.

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