Five Last-Minute Tips to Cut Your Tax Bill

Offset Your Gains with Losses

Tip 3: Offset your capital gains with losses. If you have capital gains, take a look at your portfolio and see if there are some losers that you want to sell. You can use the loss to reduce or even eliminate the amount you owe in capital gains tax.

If you have more losses than gains, you can use up to $3,000 of the excess losses to reduce your taxable income. And remember, you can minimize capital gains tax by holding stocks, mutual funds, or other assets for at least a year. The long-term capital gains rate of 15% applies to assets held longer than a year. Short-term capital gains are taxed at your ordinary income tax rate.

Get Strategic about Gifting Money

Tip 4: If you plan to give more than $12,000 to someone next year, you can avoid gift tax by spreading the amount over multiple years. For example, if you plan to contribute $20,000 toward a down payment to help your child buy a house next year, you can avoid gift tax by gifting them, say, $10,000 this year and $10,000 next year. Gifts under $12,000 are not subject to gift tax.

Tax-Deductible Expenses

And here's one last tip: if you have tax-deductible expenses such as business or medical expenses that you'd like to deduct in this tax year, but you don't want to pay for them until next year, you can put them on your credit card before the end of the year. The IRS considers an expense deductible when it's charged, not when you pay your credit card bill.

Cha-ching! That's all for now, courtesy of Money Girl, your guide to a richer life.

As always, everyone's situation is different, so be sure to consult a tax or financial advisor before making important financial decisions. This podcast is for educational purposes only and is not intended to be a substitute for seeking personalized, professional advice.

Act now to save on taxes this year.