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December 2, 2004 12:09 PM

2004 Year-End Tax Planning Moves


Excerpt: AS THE YEAR DRAWS to a close, you're probably thinking more about your holiday credit-card bills than your 2004 tax bill. Big mistake. Squeezing in a little time for some year-end tax planning can save you big bucks come tax-return time. Consider it a holiday gift from Uncle Sam — albeit one you're going to have to do a little extra work to receive.


AS THE YEAR DRAWS to a close, you're probably thinking more about your holiday credit-card bills than your 2004 tax bill. Big mistake. Squeezing in a little time for some year-end tax planning can save you big bucks come tax-return time. Consider it a holiday gift from Uncle Sam — albeit one you're going to have to do a little extra work to receive.
Here are seven tax-saving strategies for 2004 that should be employed before the ball drops in Times Square.

1. Take Advantage of the Long-Term Capital Gains Rates
When it comes to investing in a taxable account, it pays to be a long-term — as opposed to a short-term — investor. In fact, while you don't want to let the tail wag the dog, it could make sense to hold onto your investment just a little bit longer to make sure you fall into the long-term camp.

Why? Because short-term gains on investments held in a taxable account for one year or less are taxed as ordinary income, which means your tax rate can run as high as 35%. So if, for example, you hold appreciated stock for exactly one year before selling, you could owe the IRS up to 35% of your short-term profit. By contrast, if you hold the shares for just one more day, the maximum federal rate plummets to 15%. So selling just one day too soon could cost up to 20% of your profit in additional taxes.

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Read all 46 posts in the same category of Tax:

Few People Aware Of New State Sales Tax Deduction - Dec 17, 2004
Ownership Has Its Privileges - Dec 12, 2004
Bush Rejects Raising Taxes to Pay for Social Security Plan - Dec 12, 2004
Social Security Reform, With One Big Catch - Dec 12, 2004
Bush Eyes Social Security Threat - Dec 12, 2004
Put Away Your Check Book - Dec 10, 2004
IRS to Issue Rules On Tax Shelters - Dec 09, 2004
Year-End Tax Planning Moves for Small Businesses - Dec 08, 2004
Give Tomorrow, Get the Tax Break Today - Dec 08, 2004
2004 Year-End Tax Planning Moves - Dec 08, 2004
CCH Capital Changes Identifies Top Ten Tax-Complex Corporate Actions for 2004 - Dec 07, 2004
GainsKeeper Suggests Year-End Tax Planning Strategies to Minimize 2004 Taxes Owed - Dec 07, 2004
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Poll: Social Security Needs Reform - Dec 07, 2004
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More Tips to Slash Tax Tab - Dec 05, 2004
10 Tax Time Bombs To Defuse Now - Dec 04, 2004
Property Taxes Rising Nationwide - Dec 04, 2004
Noncash Gifts To Charities Can Be Deducted - Dec 04, 2004
Get Your Car Ready for a Fast Giveaway - Dec 02, 2004
Don't Fear the Use-It-Or-Lose-It Rule - Dec 02, 2004
Partnerships Lose Tax Exclusion On Canceled Debt - Dec 01, 2004
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8 Profitable Year-End Tax Moves - Nov 29, 2004
Tax Break Curbed: Changes To Donation Write-Off May Hurt Charities - Nov 28, 2004
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To the Point of No Returns - Nov 22, 2004
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Taxes and Consequences: The Second Term Begins - Nov 13, 2004
Microsoft Payout Tempts Investors On Tax Strategy - Nov 12, 2004
What the Recent Tax Changes Mean to You - Nov 07, 2004
Highlights of 2004 Changes in the Income Tax Laws - Nov 04, 2004
Bush's Tax Cuts Are Unfair ... To the Rich. - Nov 03, 2004
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