taxtips

November thinking about taxes: In general, November is not the normal time to think about tax planning. Tax planning is considered an annual drudgery beginning around January 15 and ending on April 15. Not something to ruin the holiday spirit. Yet actually, there are tax-savings tasks to think about at year-end. Doing so can make the January - April slog much smoother. Why is Planning to Save Taxes So Loathed? But I get it - no one wants to think about taxes at the holidays, or at all. And why is that? Here are several reasons given by Roger Pine, Founder of Holistiplan, a tax analysis software for financial advisors: 1) It's a bill for one of the biggest expenses all year (most times exceeded only by housing costs). 2) You are responsible for preparing your own bill, or hiring someone to do it for you. 3) The bill forms are a design disaster with unintelligible instructions that take years of schooling beyond a college degree to completely understand. 4) Even when the bill is done correctly, it's difficult to see why you got charged what you did. 5) If you don't prepare the bill, or do it wrong, there are serious legal consequences. 6) If you want a smaller bill next year, you have to know how to decipher the forms for clues. (That's why it's called the tax "code.") 7) It stinks to hear afterward, "If you had only done X, you would have saved Y," if it's too late to do X. As a result, how do taxes make most of us feel? Helpless and uninformed. Not the most empowering feelings from a financial standpoint. Tax planning and preparation does not help us achieve that sense of financial wellness, or as they say in financial therapy circles, financial "self-efficacy."  Worth Taking the Time In fact, November is a great time to consider a few year-end moves like: Roth conversions, taking capital losses or capital gains, doubling up on property taxes and charitable contributions, or making IRA and HSA contributions. Sound like a lot? It could be, but it could also save hundreds or thousands on April 15. If you have a CPA and/or CFP®, all you have to do is gather a few documents and let them do the rest. Gather these: 1) Your September or October brokerage statements (the whole statement, not just screenshots); 2) Your latest paystubs, Social Security statements, or other items showing regular income; and 3) Any large one-time transactions that happened or will happen this year, like a real estate closing statement or estimate. After reviewing these, be ready to answer more specific questions, such as any changes in your deductions. Don't worry about exact figures - it's ok to estimate right now. Why is November So Important for Tax Planning? One important goal is to make sure you don't end up with a taxable income figure that's just barely over some kind of threshold or bracket. This can cost a lot…