Year End Tax Tips
2008 is right around the corner-so it's time to look at a few year end strategies that could save you money. The Wall Street Journal provides some ideas to reduce your taxes.
• Dump your losers. Take a fresh look at your investments. Look for stocks, mutual-fund shares and other securities that now are selling for less than you paid for them. If you have some and have been considering bailing out, now could be a good time to do so. (For more background on mutual fund distributions, see IRS Publication 564.)
There are some powerful advantages. First, you can use your losses to soak up your gains on a dollar-for-dollar basis with no limit. Second, if your losses exceed your gains, you typically can deduct as much as much as $3,000 a year of net capital losses from wages and other ordinary income. (The limit is $1,500 a year if you're married and filing separately from your spouse.) Additional net losses are carried over into future years.
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