May 2016 Tax Tips

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  • When you rebalance your portfolio this year, remember that selling both winners and losers in the same year lets you offset your capital gains with losses. In addition, you can use up to $3,000 in net losses to offset ordinary income for the year. Your investment strategy should take taxes into account but should not be based on taxes alone. Also, don’t forget transaction costs in adjusting your portfolio.
  • Postpone taxes by swapping real estate instead of selling it. This may enable you to trade up to property with a higher value. A tax-deferred exchange is a great tax-cutting strategy, but the rules are complex. Be sure to seek professional guidance.
  • If spring cleaning has left you with items that you want to donate to charity, remember that donations of used clothing and household items must generally meet certain requirements to be tax-deductible. First, such items must be in “good used condition or better.” Second, a receipt from the charity is required. If the property is valued under $250 and a receipt is not available, such as at unattended drop-off locations, reliable written records are still required.
  • Making a move this year? If you meet two tests, you can deduct the cost to move your household and personal effects, including your in-transit travel expenses and storage expenses.

    First, the distance from your old home to your new workplace must be at least 50 miles farther than the distance from your old home to your old workplace.

    Second, you must work full-time in your new location for at least 39 weeks during the 12 months following your move. The time test doesn’t apply if you’re laid off from your new job or later transferred for your employer’s benefit.

  • If you’re job hunting, be aware of the potential tax breaks. You can deduct the costs of looking for a new job in your present line of work, even if you don’t get the job. Typical expenses include travel to job interviews, resume costs, and employment agency fees. You must itemize your deductions, and your total miscellaneous deductions must exceed 2% of your adjusted gross income.

The information on this site is general in nature and should not be acted upon in your particular situation without further details and/or professional advice. For assistance, contact our office.



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