Having said that, there are a number of things you might want to consider before the year is up that can lower your tax bill. Regardless of your investment situation, the first thing to do is project your expected income items and itemized deductions through year-end. If you have any stock holdings that are under water for the year in December, consider selling the stock to realize the loss. If you are doing the sale and reinvestment with the same stock, make sure you didn't originally buy the stock within 30 days of the sale, and don't repurchase that same stock for at least 30 days after the sale. Beware of the record date for capital gains distributions if you are planning to purchase a mutual fund.
Most funds provide at least a month's notice before paying out capital gains distributions.
Decide if converting to a Roth IRA is right for you. Once the taxes that conversion triggers are paid the account grows tax-free so long as you don't make a premature withdrawal. Marc Britton is managing director of taxes for Quadra Associates LLC, a New York City boutique tax and financial planning company. Mr. Britton specializes in tax and financial planning for high net worth individuals, as well as estate planning, planned charitable giving, foundations, and closely held business tax matters. By using this site, you agree to our Terms of Service .