You might not have to pay your taxes until April, but making some money moves before the end of 2021 could lower your final bill.
And if you’re really savvy about your finances, you’ll make moves that take into account your future tax liabilities as well.
If you’re looking to boost your refund from Uncle Sam next spring and for years to come, here are five things you should consider doing right now.
1. Capital Loss Harvesting
If you have some investments that have gone down in value since you bought them, you might consider selling them and taking a loss. You’re allowed to offset any capital gains you’ve taken this year with the losses, as well as up to $3,000 in personal income. Any unused losses are carried forward to future years.
But what if you don’t really want to sell? Unfortunately, you can’t sell a stock, ETF, or mutual fund and buy back your shares the next day. This violates the wash-sale rule, which stipulates that if you buy back a substantially similar asset within 30 days of a loss-making sale, it’s as if the sale never happened.