Harvest your investment losses. An important tax-saving practice allowable under the code called “tax loss harvesting” allows investors to reduce their IRS payments substantially—but it’s one that most people ignore, says Frank Armstrong, founder of investment advisory firm Investor Solutions. The strategy allows taxpayers to sell an investment like a mutual fund at a loss and then use the loss to offset either capital gains on other investments or their regular taxable income (in the case of regular income, you can apply up to $3,000 of the loss in a single year). Best of all, any losses that you don’t use now against other income can be carried forward to offset gains in future tax years.
13 Tax Breaks You’ve Never Heard Of
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