Investor’s Business Daily: Savvy Year-End Tax Planning

December 8, 2022

What end of the year steps can you take to reduce taxes?

Running Point and its chief investment officer, Michael Ashley Schulman, CFA, were quoted by Investor’s Business Daily in an article — by Paul Katzeff, “Savvy Year-End Tax Tactics” — regarding implementable steps for taxpayers to minimize taxes and retain more income; several are perennial strategies and some are specific to 2022.

In the majority of cases, the big picture for tax efficiency is to postpone income until at least January of next year and accelerate deductions into 2022. That will save money now; and income deferred into next year means taxes can be paid later with deflated/cheaper dollars—especially relevant in today’s high-inflation environment.

Quoted article excerpts are below:

Harvest tax losses. Many assets have plunged in value in 2022. That includes stocks, bonds and mutual funds. And don’t overlook cryptocurrencies that have declined in value, says Michael Schulman, chief investment officer of Running Point Capital Advisors.

The silver lining to this year’s market decline is that you can use capital losses to wipe out otherwise taxable gains.

But there are limits. You must first use losses on your investments to offset capital gains of the same type. That means you must first use short-term losses against short-term gains. And you must apply long-term losses against any long-term gains. If you have net losses of either type left over, you can then deduct them against the other kind of gain.

After that, if you have an overall net capital loss for the year, then you can deduct up to $3,000 of that loss against other kinds of income, including salary and interest.

After that, if you still have any excess net capital loss outstanding, you can carry that over to later years to offset gains and up to $3,000 worth of other income.

Also remember: tax-loss harvesting applies only to taxable accounts, not to tax-deferred accounts like IRAs, Schulman says.

Savvy Year-End tactics
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Disclosure: The opinions expressed are those of Running Point Capital Advisors, LLC (Running Point) and are subject to change without notice. The opinions referenced are as of the date of publication, may be modified due to changes in the market or economic conditions, and may not necessarily come to pass. Forward-looking statements cannot be guaranteed. Running Point is an investment adviser registered with the U.S. Securities and Exchange Commission. Registration does not imply a certain level of skill or training. More information about Running Point’s investment advisory services and fees can be found in its Form ADV Part 2, which is available upon request. RP-22-72