File Tax Help

A Strategy to Maximize Your Tax Return and Start Investing – Income Tax Returns

Normally, when you engage in year-end tax planning, you might tend to sell stocks on which you have incurred losses to offset those where you have gains, in order to pay as little capital gains tax as possible. In general that still applies. But the capital gains tax rate is scheduled to go up in 2011 from 15 to 20% and further in the ensuing years. This is unless Congress steps in and changes the law to continue the low rate that has been in effect since 2003.

Nonetheless if you are looking for additional information regarding this, here are some of the things that we've found out regarding tax consequences for settling a collection.

However, you should not do this if you would not have otherwise have sold your stocks over the next several years. This is because you do have to pay tax on any net gains, and if you delayed paying the tax for a few years or more, you wouldn't have to pay any tax at all now.

How it's been working for us.... Basically, since 2009, every year we give a donation to a registered tax shelter. This organization is helping those suffering from the Aids epidemic in the Sub-Saharan region of Africa by sending much-needed pharmaceuticals. The tax shelter gives us the donation receipt that we enclosed when filing our taxes in March of every year. By April or early May we receive our cheque from Canada Revenue. This is the safest an easy way me and my husband found to receive for two consecutive years two big, fat cheques.

The "higher capital gains rate next year" concept also creates the reverse logic on the stocks where you've had losses. Normally you might want to sell them to offset gains and accrue additional tax benefits.

Think about this: If we wouldn't choose this strategy, after a lot of due diligence and research, we wouldn't be able to save the enough money for starting our investment portfolio. Today we've invested that money in tax liens and have increased our net worth exponentially.

And so the overall point would be to shift inevitable realized overall gains to this year, and losses to next year.

You would think that you have saved quite an amount at the time of course since you practically think that the other $4000 still missing no longer needs to be settled anymore - wrong, because as soon as this happens, the IRS takes over to collect the missing amount. Tax consequences for settling a collection can be numerous and it is important that you learn about them as much as you can before you yourself start to consider it as your easy way out.

Harris Smith offers advice on home equity line of credit and obtaining credit

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