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Still In Sticker Shock Over Your Tax Bill?
www.DanvilleLivingCA.com @DanvilleLivingCA #DanvilleLivingCA
By Matt Forrey, RBC Wealth Management, Resident since 2009 and James Carbonell, RBC Wealth Management, Resident since 2004
For many individuals, the first tax filing under the new federal tax law has proven to be confusing and in some cases, painful.
Here are a few potentially tax saving ideas to consider now in anticipation of next year’s tax filing.
Tax-free Municipal Bonds:
Municipal bonds issued by the state of California generate income exempt from federal tax and for California residents, state income tax. For a California resident in the highest federal income tax bracket of 37%, a municipal bond yielding 2.5% offers the same net return as a taxable investment, such as a corporate bond or CD, yielding 5.03%.
Long-term Gains:
Waiting a few extra days before selling any appreciated securities can make a significant difference in your taxes. Profits on sales of securities held less than one year are taxed as ordinary income, which for an individual in the highest tax bracket, can be upwards of 37%. Gains on securities held for greater than one year are taxed at the federal capital gains rate of 20%.
Tax Deductible Retirement Contributions:
Maximize deductible contributions to any qualified accounts including company sponsored retirement plans, IRA’s and SEP’s. Doing so will lower your taxable earnings for the year.
Plan Ahead:
Schedule a review now for the end of the year to ensure that you identify any potential strategies to lessen a portfolio’s tax bite.
Feel free to give our office a call if you would like to schedule complementary review of your portfolio to identify any potential tax savings strategies. Please call 925-279-1701, email carbonellforreywmg@rbc.com or visit our website at www.rbcwmfa.com/carbonellforreywmg/.
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