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8. Offset gains with losses. Tally up your investment winners and losers for 2006. Then, determine whether it makes sense to take tax losses by selling your unattractive stocks. If your losses exceed your gains, you can deduct up to $3,000 in capital losses ($1,500 for married couples filing separately) against your other income, reducing the amount on which you must pay taxes. Losses in excess of $3,000 can be carried forward into subsequent years.

9. Convert to non-deductible interest. Consider whether it might make sense to convert non-deductible interest into a tax break by applying for a home-equity loan. You can use the proceeds of a home-equity loan to pay off your high-interest credit-card balances and, in most cases, fully deduct the interest you pay on home-equity debt.

This entry was posted on Saturday, January 13th, 2007 at 6:04 am and is filed under My Finances. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.