Comments on: 5 Areas to Look Into Before the 2008 Tax Year Ends http://moneyning.com/tax/5-areas-to-look-into-before-the-2008-tax-year-ends/ A personal finance blog where we share insights on carefully saving money, investing, early retirement, mortgages, stocks because the little things matter in achieving financial freedom! Sat, 21 Nov 2009 08:01:45 -0800 http://wordpress.org/?v=2.8.6 hourly 1 By: MoneyNing http://moneyning.com/tax/5-areas-to-look-into-before-the-2008-tax-year-ends/comment-page-1/#comment-12530 MoneyNing Thu, 18 Dec 2008 16:42:46 +0000 http://moneyning.com/?p=1872#comment-12530 Jules: Let me try to explain. Let's say you bought 200 shares of Citigroup (C) when it was $30 per share. This cost $6000. Now let's just say the price per share of C is now $10. This means that the shares are worth $2000 and you (on paper anyway) lost $4000. If you sell 150 shares and get the price of $10 per share, you get $1500 back. However, you used $4500 to buy those shares so you have a $3000 lost. On your tax form (schedule D), record your stock transactions which will reflect this $3000 lost. The math works out that this $3000 lost will be deducted from your ordinary income so that part of the lost won't be taxed. All this assumes that you don't have any other stock transactions. However, if you do, just sell losers until the tax loss is $3000 more than the gains. I hope that answers your question and as long as the stock transactions are done that way, just follow the steps on the tax forms and the math will work itself out. Jules: Let me try to explain. Let’s say you bought 200 shares of Citigroup (C) when it was $30 per share. This cost $6000. Now let’s just say the price per share of C is now $10. This means that the shares are worth $2000 and you (on paper anyway) lost $4000. If you sell 150 shares and get the price of $10 per share, you get $1500 back. However, you used $4500 to buy those shares so you have a $3000 lost. On your tax form (schedule D), record your stock transactions which will reflect this $3000 lost.

The math works out that this $3000 lost will be deducted from your ordinary income so that part of the lost won’t be taxed.

All this assumes that you don’t have any other stock transactions. However, if you do, just sell losers until the tax loss is $3000 more than the gains.

I hope that answers your question and as long as the stock transactions are done that way, just follow the steps on the tax forms and the math will work itself out.

]]> By: Jules http://moneyning.com/tax/5-areas-to-look-into-before-the-2008-tax-year-ends/comment-page-1/#comment-12523 Jules Thu, 18 Dec 2008 06:12:00 +0000 http://moneyning.com/?p=1872#comment-12523 I have a questions regarding #1. If you have individual stocks that you want to sell, what defines them as "losers"? Just that they are worth less than you bought them for? So if you bought them for 8X but now they are worth 2X, you could sell them and claim a loss of "6X" as long as 6X is $3000 or less? Or is that an additional deduction to the 6X value? Sorry, I'm quite confused about this! And hopefully my attempt at an explanation is not confusing to you or others. Thanks MoneyNing. I have a questions regarding #1. If you have individual stocks that you want to sell, what defines them as “losers”? Just that they are worth less than you bought them for? So if you bought them for 8X but now they are worth 2X, you could sell them and claim a loss of “6X” as long as 6X is $3000 or less? Or is that an additional deduction to the 6X value?

Sorry, I’m quite confused about this! And hopefully my attempt at an explanation is not confusing to you or others. Thanks MoneyNing.

]]> By: Dividend Growth Investor http://moneyning.com/tax/5-areas-to-look-into-before-the-2008-tax-year-ends/comment-page-1/#comment-12515 Dividend Growth Investor Wed, 17 Dec 2008 21:58:21 +0000 http://moneyning.com/?p=1872#comment-12515 As a matter of fact there are several stock strategies that rely on buying stocks which have been oversold from investors taking tax losses.. As a matter of fact there are several stock strategies that rely on buying stocks which have been oversold from investors taking tax losses..

]]> By: Dustin McClure http://moneyning.com/tax/5-areas-to-look-into-before-the-2008-tax-year-ends/comment-page-1/#comment-12505 Dustin McClure Wed, 17 Dec 2008 12:21:10 +0000 http://moneyning.com/?p=1872#comment-12505 Good call - I need to get all my donations out the door ASAP! Thanks for the tips Good call – I need to get all my donations out the door ASAP!

Thanks for the tips

]]> By: Eric J. Nisall http://moneyning.com/tax/5-areas-to-look-into-before-the-2008-tax-year-ends/comment-page-1/#comment-12499 Eric J. Nisall Tue, 16 Dec 2008 19:25:53 +0000 http://moneyning.com/?p=1872#comment-12499 I honestly think this is one of the more poorly organized tax-roundups I have read. It makes mention of a select few tips, which really do not go a long way toward reducing tax liability. In fact, the tips are rather pedestrian for the Wall Street Journal, as most of the "tips" have been written about by virtually every personal finance blogger already. I do have to disagree with the condemnation of the paper over the credit card suggestion, even though I think the context of that specific example is dumb. That periodical is not specifically aimed to frugal, or cash-only lifestyle people, and in reality it is a viable tip, if not for the part about not having the cash to do so. Plenty of people do it this way since many credit card issuers provide year-end summaries which makes it easier than hoarding receipts (if you even remember to get one). I honestly think this is one of the more poorly organized tax-roundups I have read. It makes mention of a select few tips, which really do not go a long way toward reducing tax liability. In fact, the tips are rather pedestrian for the Wall Street Journal, as most of the “tips” have been written about by virtually every personal finance blogger already.

I do have to disagree with the condemnation of the paper over the credit card suggestion, even though I think the context of that specific example is dumb. That periodical is not specifically aimed to frugal, or cash-only lifestyle people, and in reality it is a viable tip, if not for the part about not having the cash to do so. Plenty of people do it this way since many credit card issuers provide year-end summaries which makes it easier than hoarding receipts (if you even remember to get one).

]]> By: MoneyNing http://moneyning.com/tax/5-areas-to-look-into-before-the-2008-tax-year-ends/comment-page-1/#comment-12476 MoneyNing Mon, 15 Dec 2008 19:47:58 +0000 http://moneyning.com/?p=1872#comment-12476 Bill: I believe it's the author of the WSJ article. I know how you feel about the recommendation though. It's sad that the editor allowed this kind of advice to be published in such an reputable paper. Bill: I believe it’s the author of the WSJ article. I know how you feel about the recommendation though. It’s sad that the editor allowed this kind of advice to be published in such an reputable paper.

]]> By: Bill M. http://moneyning.com/tax/5-areas-to-look-into-before-the-2008-tax-year-ends/comment-page-1/#comment-12475 Bill M. Mon, 15 Dec 2008 19:33:41 +0000 http://moneyning.com/?p=1872#comment-12475 Who put out the recommendation to contribute to charity using a Credit Card, the credit card companies? Who put out the recommendation to contribute to charity using a Credit Card, the credit card companies?

]]> By: MoneyNing http://moneyning.com/tax/5-areas-to-look-into-before-the-2008-tax-year-ends/comment-page-1/#comment-12474 MoneyNing Mon, 15 Dec 2008 17:44:07 +0000 http://moneyning.com/?p=1872#comment-12474 BT: I think the difference is that with an IRA, you can directly transfer the money before it's taxed straight to the charities. Otherwise, you will have to take the money out, pay taxes, then the givings could be used to deduct taxes. The former works better for keeping your money. BT: I think the difference is that with an IRA, you can directly transfer the money before it’s taxed straight to the charities. Otherwise, you will have to take the money out, pay taxes, then the givings could be used to deduct taxes. The former works better for keeping your money.

]]> By: BT http://moneyning.com/tax/5-areas-to-look-into-before-the-2008-tax-year-ends/comment-page-1/#comment-12473 BT Mon, 15 Dec 2008 17:37:15 +0000 http://moneyning.com/?p=1872#comment-12473 I'm confused by num 4. I thought I could donate a charity without paying taxes. That's why I get a tax deduction for donating to a charity. So what does this rule really do? IRA disbursements are taxable, then I give some or all of my disbursement to a charity and get a tax deduction for it. Doesn't that work even without this rule that has been extended through 2009? I’m confused by num 4. I thought I could donate a charity without paying taxes. That’s why I get a tax deduction for donating to a charity. So what does this rule really do? IRA disbursements are taxable, then I give some or all of my disbursement to a charity and get a tax deduction for it. Doesn’t that work even without this rule that has been extended through 2009?

]]>