2010 Folio News

Tips on Planning for Taxes
(by Brian J. O’Connor, Detroit News)

April 5, 2010 – As taxpayers complete their 2009 returns, they should remember that tax planning isn’t a once-a-year job, according to online brokerage Folio Investing.

“While some investors traditionally become interested in tax planning strategies at year-end or during tax filing season, it really should receive year-round attention,” said Brad Flanigan, vice president of product management.

He has these tips:

  • Stay aware of pending changes in tax rates. This year, more than any in recent memory, federal tax rates are in flux. The tax cuts enacted in 2001 and 2003 during the Bush administration are scheduled to expire at the end of 2010. However, the administration has proposed extending the cuts for all but higher income taxpayers.
  • Offset tax gains by strategically harvesting tax losses. If your portfolio review prompts a decision to sell a stock that has performed well, sell poorly performing securities to reduce your overall capital gains. You also can offset up to $3,000 of regular income with investment losses.
  • Defer gains from short-term to long-term. The gain on the sale of a security held for one year or less is considered short-term and is subject to ordinary federal income tax at rates up to 35 percent. But if you’ve held the security for more than a year, the gain is taxed at the 15 percent capital gains rate.