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5 Things to Do Before December that You'll Thank Yourself for in April

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Sell, Sell, Sell

Yes, we're aware of the old "buy low, sell high" wisdom, but there are exceptions to every rule, and the end of the calendar year can be one of them -- depending on your situation. In December, if you know that you're going to be recording (and thus getting taxed for) capital gains on your investments, you might want to consider offsetting those gains. And the way to do that is to sell some of the lower-performing stocks in your portfolio to generate tax-deductible losses. It could go against every fiber of your body to sell low and take a loss, but it'll pay off in April. By the same token, you probably shouldn't invest in anything high-performing at the end of the year. You'll get taxed on the gains even if you just bought it.

Check out the next page for more information about the dreaded tax season.

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Sources

  • AllBusiness.com. "10 Year-End Tax Tips." (Accessed Sept. 16, 2010) http://www.allbusiness.com/personal-finance/individual-taxes/2483-1.html
  • Bell, Kay. "Cut Taxes with Early Mortgage Payment." Bankrate.com. (Accessed Sept. 15, 2010) http://www.bankrate.com/finance/taxes/cut-taxes-with-early-mortgage-payment-1.aspx
  • Bradford, Stacey L. "Year-End Tax Tips." WalletPop.com. (Accessed Sept. 16, 2010) http://www.walletpop.com/top5/taxes/year-end-moves/
  • H&R Block. "Medical Expenses." (Accessed Sept. 15, 2010) http://www.hrblock.com/taxes/tax_tips/deductions_credits/medical_expenses.html
  • H&R Block. "Year-End Tax Tips." (Accessed Sept. 15, 2010) http://www.hrblock.com/taxes/tax_tips/tax_planning/yearend_planning.html
  • IRS.gov. "Ten Tips for Taxpayers Making Charitable Donations." (Accessed Sept. 15, 2010) http://www.irs.gov/newsroom/article/0,,id=172936,00.html

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