Tax Planning

The Age of Tax Planning – Monterey Herald

As the end of another year is fast approaching, it is important to review your tax situation to ensure that you are taking advantage of all possible tax-saving tools.

Remember that the 2021 tax planning will be too late in January 2022!

The following is an example of 2021 tax saving and deferral strategies that are available to you if you trade before December 31, 2021:

1. Capital gains can be offset by capital losses. Therefore, it is recommended that you review your investment transactions for the year to determine your capital gains position. If you currently have a net capital gains position, you should review your investment portfolio for a losing position that you can sell before December 31st to offset your net capital gains. Likewise, you may want to sell valued securities to take advantage of a losing capital position. (Note: don’t forget about the income from capital gains that you may receive from your mutual funds!)

2. Mortgage interest is generally paid in arrears (we pay interest on the first of each month on the previous month’s interest). So if you speed up the mortgage payment on January 1, 2022 by paying it in December 2021, you can deduct the December 2021 mortgage interest in 2021 instead of 2022.

3. If possible, we encourage you to move forward to charitable donations by December 2021 instead of waiting until January. This is the time to repack your obsolete clothing and furnishings for collection by your preferred charity. Make sure you get a detailed receipt and keep it for your tax return maker! There can also be huge tax savings by donating treasured property (stocks, bonds, real estate, etc.) to nonprofits by subtracting the fair market value of the gift without having to acknowledge the capital gain.

4. Other deductible expenses such as medical expenses, health insurance premiums, property taxes, government-estimated tax payments, etc. should be reviewed for a possible acceleration into the 7.5% adjusted gross income limit.

5. The income shift into 2022 can often be achieved with a little planning. There are numerous situations when you can postpone receiving taxable income until January 2022.

6. Real estate tax payments can be expedited and deducted in 2021 by paying your invoice for the second half of 2021/2022 due April 10, 2022 by December 31, 2021. Note, however, that the total state and local tax withholding is capped at $ 10,000 for individual federal deductions.

The above is just a small sample of the simple techniques and strategies that can help you reduce your income tax liability. Before taking any of the above measures, I recommend consulting your tax advisor first.

Barry Dolowich is a certified public accountant and owner of a full service accounting and tax firm with offices in Monterey. He can be reached at (831) 372-7200. If you have any questions, please contact Barry, PO Box 710 Monterey, CA 93942-0710 or email:

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