TaxProf Blog

Editor: Paul L. Caron, Dean
Pepperdine University School of Law

Sunday, November 25, 2012

WSJ: Year-End Tax Moves

WSJWeekend Wall Street Journal Tax Report:  Tax Moves to Make Now, by Laura Saunders:

The annual scramble to make smart tax moves before Dec. 31 is proving especially vexing this year. Congress still hasn't settled 2013 tax rates on income, investments, large gifts and estates. Deductions and other breaks are also in doubt, now that politicians from both parties are calling for cutbacks—although in different ways.

And huge questions remain unanswered even for the 2012 tax year. For example, the IRS on Nov. 13 warned lawmakers that if they don't act soon, the alternative minimum tax, which reduces the value of some tax breaks, will apply to 33 million households for 2012 rather than four million. More than 60 million people might not be able to file returns or receive refunds until late March, the IRS says, because it would have to reprogram computers.

Yet despite the uncertainties, advisers say year-end tax planning is possible. ... Here are moves to consider before year end, plus a few to avoid:

  • Make charitable gifts
  • If you want to donate IRA assets to charity, wait a bit longer
  • Make an extra mortgage payment, or pay down principal
  • Don't fret about the alternative minimum tax "patch" for 2012
  • Maximize contributions to employer-sponsored retirement plans
  • Evaluate stock options and restricted stock
  • Think twice before harvesting gains
  • Harvest capital losses, up to a point
  • Use up funds in a medical flexible-spending account
  • Accelerate medical expenses
  • Set up a health savings account for 2012
  • Write next semester's tuition checks before year end
  • Prepay state taxes
  • Make gifts up to $13,000 to relatives or friends
  • Contribute to 529 education savings accounts
  • Have a closely held business pay a dividend
  • Buy depreciable equipment for a closely held business

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