Unfortunately I have a client that is in an unusual position. They want to minimize their taxes, but December is too late to effectively plan for them.
They make a reasonable amount of interest income. But, they get a lot of dividends and a lot of capital gains. Both of these are derived from mutual funds that make all sorts of adjustments at the end of the year, which we cannot control.
They are aware that Schedule A deductions start to hit the limitations at the $250,000 level and last year their AGI was $220,000. So a just a minor increase in income sources can put you into the AMT and then you hit the phase-out’s of Schedule A deductions.
So for the moment we are stymied on how to best advise them with so little time. The typical give-up’s are IRA’s but you have no earned income. It is too late to setup a business, but why a business just to lose money start, a couple years back they closed a profitable one to free up the time to enjoy retirement. Repositioning their income sources to tax favorable status takes time that we do not have for 2015.
Does your portfolio have any capital losses that we can utilize? This would be a time to look at this option.
That basically leaves us with Schedule A and we have only a couple of options (donations and property taxes), both of which could be discounted as well.
Some planning takes time to be able to maneuver to meet the goals. So they now have a rough outline on how we should move in 2016.