10 Year End Tax Planning Tips by Rico Dilello


By Rico Dilello

Now, is a good time to do some year-end tax planning! Holiday season is just around the corner and you are going to be busy visiting with family & friends plus Christmas shopping. Not everyone celebrates Christmas but almost everyone pays taxes. You could be glad in April by tax planning now because it could generate a bigger tax refund. I absolutely hate over paying income taxes and waiting until tax filing season is way too late.

Tip 1

Add up your medical bills from this year and compare them to last year. If you have spent less, you may want to reschedule your dentist appointment from early January to December. Why wait until next year if you need new eyeglasses or hearing aids, buy them now. Planning a winter vacation that requires medical shots, get them now.

Tip 2

Add up your charitable donations and compare them to last year. If you have donated less or nothing at all, now would be a good time to be generous. Wealthy people donate stocks, ETFs and mutual funds that have a capital gain instead of money. They don’t have to pay any tax on the gain and they get a bigger tax deduction.

Tip 3

Get out your lasts year’s tax return and see if this year’s income will be higher than last year. Will you be in a higher tax bracket? If yes, an extra contribution to your tax deductible retirement account could generate a bigger tax saving.

Tip 4

Have you sold any investments in 2015 that will generate a capital gain? Consider doing some tax loss selling of investments that are underwater to offset the capital gains. In Canada, a capital gain loss can be carried back three taxation years to offset capital gains incurred in that year. You can always buy them back later. (You will have to wait 31 days to rebuy to avoid “superficial loss rules”)

Tip 5

Postpone selling your investment winners in non-registered accounts until Jan to avoid paying tax in April.

Tip 6

Look for ways to legally split income by transferring income producing assets to family members that are in a lower tax bracket. For example, in Canada you can contribute to your spouses’ retirement fund and claim the deduction.

Tip 7

Top up education savings plans for your children & grandchildren to ensure your plan gets any eligible government grants. (Canadian grants stop the year in which the child turns 18)

Tip 8

Getting a big year-end bonus? It may be better to postpone getting it to January or have your employer deposit the bonus directly into your retirement account!

Tip 9

Check to see if there are any changes to tax laws that could affect your tax return for 2015 & 2016. There could be some new tax deductions or some deductions that could be eliminated. (In Canada, a safe deposit box is no longer tax deductible)

Tip 10

Business owners should go over their account receivables and make a list of potential bad debts. Consider writing off any bad debts that are more than 120 days overdue before tax season ends.

The tax man is happy to pick your pockets for more money. It is up to you to legally avoid paying them too much. Remember, rich people stay wealthy because they can afford the best tax specialist to reduce the amount of tax that they pay.

tax 1

By Rico Dilello


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