Market Beat: Tax-planning strategies at year’s end

Ken Roberts
Market Beat
Ken Roberts

As the year end is approaching it might be a good time to review your portfolio to see if you’re taking advantage of the tax deductions that are available.

The maximum contribution to retirement accounts should be made if you can.

For Roth and traditional IRAs, the maximum contribution for 2019 is $6,000. If you’re over the ripe old age of 50 years you can contribute $7,000. If you have a 401k plan at work, you can contribute $19,000 or $25,000 if you’re over 50 years old. That’s up $500 from last year. You have until April 15, 2020, or the time you file your taxes to make retirement account contributions, whichever is earlier.

If you use a Health Savings Plan, the maximum for 2019 for an individual is $3,500 and for a family plan it is $7,000, those limits are also higher than last year by $50 for individuals and $100 for those with a family plan. HSAs can be good financial planning tools because if the funds are not needed for medical expense, they can be used to supplement your retirement income.

For taxable brokerage accounts, short term gains are taxed as income. Long term capital gains are taxed at either 0%, 15% or 20%, depending on your income tax bracket. It’s zero for single people who make less than $39,375 or married couples who file jointly and make less than $78,750. The 15% rate applies to single filers who make less than $434,550 and married filers who make less than $488,850. For anyone fortunate enough to be above those levels, the 20% rate applies.

Short term losses can be used to offset income or short term capital gains. Long term capital losses can be used to offset long term capital gains. The holding period for short term is less than one year and to qualify as long term it is more than one year. Long term capital loss writeoffs are limited to $3,000, any losses greater than that can be carried forward to future years.

Under a new rule long term capital gains can be placed into an opportunity zone investment and the gains can be deferred. If the opportunity zone investment is held for five years the gain is deferred and reduced, then reduced more after seven years. If the investment is held more than ten years it can be sold without capital gains tax.

Kenneth Roberts is a Truckee-based Registered Investment Advisor. Information is at his blog at or 775-657-8065. The mention of securities should not be considered an offer to sell or solicitation to buy investments mentioned. Consult your investment professional to understand the risks and/or how the purchase or sale of these investments may be implemented to meet your investment goals. Past performance is no guarantee of future results.

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