When's the best time to start planning for your 2015 tax return? There's no time like now, said certified financial planner Stacy Francis, president and CEO of Francis Financial.
She recommends four key steps that can help reduce your annual tax burden.
First, be sure to take advantage of any available qualified retirement savings plan at work, such as a 401(k) or 457.
Second, consider tax-loss harvesting. "If there are certain stocks in your portfolio that have had losses and they no longer fit your investment strategy for the long term, it's ideal to sell those to offset some of the areas in your portfolio that have gains," Francis said.
Next, up your charitable giving or start donating now. There are two tax-efficient ways to give to good causes: You can write a check or "you can also be really smart about it," said Francis, and donate investments that have appreciated in value. "You donate that investment and get to deduct the full amount of that account," she added. "At the same time, you don't have to pay taxes on the large gains that you might have."
The final step Francis recommends is accelerating deductions for 2016. "If you have property taxes due in January 2016, it's a great strategy to go ahead and prepay those in December," she said. "It's going to increase the amount of money back in your pocket when it comes to your tax return."
You have until Dec. 31 to take advantage of these recommendations, but remember that time flies, said Francis. "Make sure you don't wake up with your New Year's hangover realizing you forgot to do something important."