4 Important Tax Tips To Handle Before New Year’s Eve

tax tipsWhether it is personal or for a corporation, you’re coming up to a specific date that (for tax purposes) makes a difference. It’s wise to be aware of how investments and purchases around this time can affect your bottom line so you can make the right decisions at the right time.

Pay attention to these four year-end tax tips and spare yourself the feeling of wishing you had acted when the time was right. After December 31, there is no going back.


1. Review Your Investments

tax tips

The first thing you have to do is you have to look at your investments and see if there is any thing that you need to do before the year-end.

One of the things I always have clients look at is if they have losses in stocks that they want to get rid of that should be sold before the year-end. You might as well create those losses and get them in, especially if you have realized any gains in 2012.

A word of caution however, don’t invest for tax purposes.

Don’t let the taxes drive your investment decisions. You should invest for investing purposes and leave your tax planning for tax purposes. Sometimes they meet, sometimes they don’t. If it is an investment you believe in and has tax advantages, great.  If it has tax advantages, but you likely will never see your money again, don’t do it. Simple.

Related: Is Greed Holding You Back In Business?


2. Watch Those Year End Dividendstax tips

If you are an investor, you need to be aware of the fact that a lot of companies give out dividends in the last few weeks of the month. You’ll need to pay attention because if you acquire an investment near the end of the month that has an accrued gain in it and the company decides to give out dividends before December 31, you’re going to be taxed on those dividends.

So even though you didn’t get the benefit of that dividend (usually because you paid for it), you still need to be careful that you don’t acquire stocks or investments that have accrued gains that are going to be realized by the year-end as you may end up paying twice for the gain.


3. Get In Your Expensestax tips

If you’ve got a specific personal investment like a rental property and it needs some repairs and maintenance, try to do those repairs in December so the expense goes against this year’s income and reduces your taxes.

If you’ve got any other expense that’s going to incur in the near future because it needs to be done and you’re going to do it – you might as well do it in the current year and not wait for the New Year to pass, as long as it is deductible against income. This is easily one of the tax tips most people overdue so only buy what you actually need!


tax tips4. Acquiring Assets

If your year end for business purposes is December 31 and you are planning to acquire an asset in the first few months of the New Year for your company, and it is an asset that is a depreciable asset for tax purposes, it would make the most sense to acquire it in December so you can claim half a year’s worth of CCA on that asset. With that half a year it allows you to claim the full year of CCA (or depreciation) next year for tax purposes. If your cash flow allows you to buy it before year end, it can benefit you for tax purposes.

Related: How Much Debt Is Too Much Debt?


Make Smart Decisions

Don’t go out and purchase assets you didn’t plan on buying or drop investments you planned on keeping just for (perceived) short-term tax gains and tax advantages. Watch your gains and losses on your investments if you’ve accrued any. If you want to realize them, realize them. If you have the expenses or things like that in your company that you can expense immediately than acquire them.

Whatever you do, just make sure you are making informed decisions for the right reasons.  Don’t let the “tax tail” wag the dog.



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