5 Tax Considerations as 2013 Summer Ends

August 26, 2013 | By: TaxCure Staff

end of summer tax tipsIt’s just about time to bid summer farewell. And, even though we often think of tax time as a strict winter occurrence, the reality is that you can be ahead of the game by doing a little tax planning right now.
In fact, the end of summer is a great time to consider your tax needs for the rest of the year. Rather than trying to cram everything in all at once as the year ends, you can make measured decisions about what you need to do during the last part of this year, and what would be better put off until next year.

Here are 5 considerations for the end of summer:

1. What Will Your Taxes Look Like Next Year?

Before you make any decisions about what to do for the rest of the year, look ahead. What will your tax situation look like in 2014? If you think that your taxes are going to go up, you might want to delay actions that result in deductions if you can. Instead, pay taxes now, and then work to reduce your income in the coming year.

2. Should You Itemize?

Now is also a good time to consider whether or not you should be itemizing. Get a copy of Form 1040 Schedule A, and add up possible itemized deductions. How close are you to having enough itemized deductions to overcome the standard deduction?
If you just need a few hundred dollars for itemizing to be worth (and reduce your income by a little bit more) finding out now can be helpful since you have time to increase your deductions.

3. Rollover to a Roth IRA

If you are certain that your taxes will rise over time, and that you are going to find yourself paying more during retirement, now can be a good time to roll your Traditional IRA into a Roth account. You will have to pay taxes on the amount of your rollover, but lower taxes now is better than higher taxes later. And your further earnings in the Roth account will grow tax-free.
Now is a good time to run the numbers and see if it makes sense for you since you can get the ball rolling.

4. Estate Planning

Rather than waiting until you are dead to provide gifts for your heirs, you can consider doing it now. Now is a great time to start giving gifts, without having to worry about the gift tax. You’ll reduce the size of your estate to boot, meaning that it will be subject to lower taxes.
On top of that, there are other estate planning items to consider now. The establishment of trusts and other estate planning strategies can be implemented now, while you can reap the benefits.

5. Think About Selling Investments

Now is also a good time to review your portfolio. Did you sell some investments earlier in the year for solid gains? If so, you can offset some of the tax you are expected to pay by selling some losing investments at a loss. It’s also possible to receive deductions for selling losing investments.
If this is a possibility, now is a good time to start examining your investments so that you can get a better idea of what you might want to sell. It’s better if your investment decisions are in line with a plan, and thinking about this now, before you’re in a rush to sell at the end of the year, is a better option.